News 24 Oct 2013 Email # 242-2013imranghazi.com/mtba/downloads/News/2013/News 24 Oct...PAK LAW PUBLICATION News Alerts 24 October 2013 EMAIL # 242-2013 Mail to: [email protected]

PAK LAW PUBLICATION News Alerts 24 October 2013EMAIL # 242-2013

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Daily News

Thursday, October 24, 2013

PAK LAW

PUBLICATION

2013

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News ContentsTop Stories.............................................................................................................................................5

TOUGH SLOG: Pakistan, US struggle to workout new partnership ........................................................5

Trade, investment and energy sectors: Pakistan, US to launch initiatives to bolster prospects............6

Biden reaffirms commitment to strong ties ...........................................................................................7

$1.6 billion aid part of annual funding process: US embassy .................................................................8

Pre- and post-tariff revision periods: Prime Minister's task force to conduct billing audit ...................9

KESC excluded: Discos' September tariffs raised by 32 paisa per unit ...................................................9

Senate panel seeks details of payments to IPPs ...................................................................................10

Taxation: Pakistan ..............................................................................................................................12

Filing of IT returns: FBR extends date up to November 30...................................................................12

Import from China, South Korea and Vietnam: new customs values for PE Tarpaulin issued.............12

SHC grants relief against payment of ISL ..............................................................................................14

PaCCS rollout, $11.5 million payment: FBR body to probe pact with Agility .......................................14

WeBOC improvement: Commission makes key recommendations.....................................................15

Taxation: World...................................................................................................................................17

Big companies push back against G20 tax avoidance plan...................................................................17

EU lawmakers reject subsidies for new fishing boats...........................................................................18

Business & Economy...........................................................................................................................19

FPCCI asks for extension of date for filing income, wealth tax returns................................................19

Pakistan envoy sees visible improvement in investment ties with Malaysia .......................................19

Indonesian businessmen can benefit by enhancing economic cooperation........................................21

Sunflower cultivation on 1.75 lakh acres in Punjab..............................................................................22

New entrant policy for motorcycles industry: No additional custom duty to be charged...................23

Growth target needs downward revision: PC.......................................................................................24

Cotton and Textiles: Pakistan ............................................................................................................26

Cotton market: prices remain steady amid strong demand.................................................................26

Government urged to take notice of 'misuse' of cotton cess...............................................................27

Christmas buyings help boost exports to EU, US..................................................................................28

Agriculture and Allied: Pakistan .......................................................................................................29

Khyber Pakhtunkhwa government promotes doctors, agriculture officials.........................................29

Rabi Festival begins today.....................................................................................................................29

Gold import soars: 380.47 percent in first quarter of current fiscal ....................................................30

Global livestock nutrition conference begins at UVAS .........................................................................31

IT and Computers: Pakistan ..............................................................................................................31



WeBOC improvement: Commission makes key recommendations.....................................................31

Fuel and Energy: Pakistan .................................................................................................................33

KESC excluded: Discos'' September tariffs raised by 32 paisa per unit ................................................33

Senate panel seeks details of payments to IPPs ...................................................................................34

Power sector: PSO receivables reach Rs 98 billion mark......................................................................35

Solar energy plants in Pakistan: Shahbaz arrives in China to explore possibilities...............................36

Speakers urge government to renegotiate gas price with Iran ............................................................36

Purchase of transformers: over Rs nine billion loss caused to national exchequer .............................38

Fuel and Energy: World......................................................................................................................40

Oil down as US inventories rise, spread trade volatile .........................................................................40

Markets ................................................................................................................................................42

LSE gains 15.95 points...........................................................................................................................42

BR Research: All .................................................................................................................................43

Slow down the privatisation bandwagon .............................................................................................43

Expenses take a toll on Samba’s profits................................................................................................44

Attock Cement stands firm ...................................................................................................................45

Faysal Bank turns the odds in its favour ...............................................................................................46

National Foods: inching closer to Vision 2020......................................................................................47

Lafarge weighed down by third quarter ...............................................................................................49

Brief Recordings..................................................................................................................................53

Attock Cement Pakistan Limited...........................................................................................................53

Miscellaneous News ............................................................................................................................57

Dismal State: Pakistan’s current account deficit widens to $1.2b........................................................57

Fuel price adjustment: NEPRA increases power tariff by 32 paisa per unit .........................................58

Corporate results: Pakistan Tobacco earnings soar 134% in Jan-Sept period......................................59

Corporate results: Lafarge Cement profit drops 86% as cost rises.......................................................61

Respite: FBR extends deadline for IT returns, wealth statements .......................................................62

Stumbling blocks: Law and order, energy crisis stymie Japanese investment .....................................63

Focus on Pakistan: Panasonic to step up activities next year...............................................................65

China offers assistance in mining and agriculture ................................................................................66

IMF team arriving: Pakistan lags far behind in foreign reserves target................................................67

OPEN MARKET FOREX RATES................................................................................................................69

INTER BANK RATES................................................................................................................................70

Bullion Rates (Gold Prices) in Pakistan Rupee (PKR).............................................................................71





Top Stories

TOUGH SLOG: Pakistan, US struggle toworkout new partnershipOctober 24, 2013

Prime Minister Nawaz Sharif called Wednesday on US President Barack Obama to end dronestrikes, which are widely unpopular in his country. Speaking next to Obama in the OvalOffice, Sharif said he "brought up the issues of drones during our meeting, emphasising theneed for an end to such strikes."

Obama did not mention drones when addressing reporters. But in a joint statement, the twoleaders said their partnership was "based on the principles of respect for sovereignty andterritorial integrity." Obama also tried to reassure Pakistan on the status of Afghanistan,where US combat forces plan to withdraw next year. Obama said he was "confident" of asolution "that is good for Afghanistan, but also helps to protect Pakistan over the long term."

Obama hailed Pakistan's sacrifices from extremism. More than 40,000 Pakistanis have died inattacks over the past decade. "I know the Prime Minister is very much committed to try toreduce this incidence of terrorism inside Pakistan" and also wants to stop its export, Obamasaid.

APP adds: President Barack Obama welcomed Prime Minister Nawaz Sharif at the WhiteHouse Wednesday afternoon as the two leaders discussed an array of issues, including areasof bilateral economic co-operation and regional security. Prime Minister Sharif was greetedby White House Acting Chief of Protocol on arrival at the White House as a band lined up onboth sides of path leading to the Oval Office while American flags fluttered amid wintrybreeze.

The White House talks are being viewed with a great degree of interest in Washington, withthe US looking to Pakistan's help for Afghan peace as well as drawdown of its forces fromthe landlocked country on Pakistan's western border. "The meeting will highlight theimportance and resilience of the US-Pakistan relationship and provide an opportunity for usto strengthen co-operation on issues of mutual concern, such as energy, trade and economicdevelopment, regional stability, and countering violent extremism," a White House statementsaid on the eve of talks.

Copyright Agence France-Presse, 2013



Trade, investment and energy sectors:Pakistan, US to launch initiatives to bolsterprospectsOctober 24, 2013

The United States and Pakistan will be engaged in a range of initiatives in the coming monthsto help bolster co-operation in trade, investment and energy sectors. Briefing journalists abouta series of meetings of Prime Minister Nawaz Sharif had with top Obama administrationofficials, Foreign Secretary Jalil Abbas Jilani said the Pakistan-US Working Group onEnergy will meet in Houston and Washington in November to discuss ways to expand co-operation.

US Finance Secretary Jack Lew hosted dinner for the prime ministerial delegation, which wasattended by secretaries of energy, US trade representative, USAID chief and president ofOverseas Private Investment Corporation. Earlier, World Bank President Dr Jim Yong Kimcalled on Prime Minister Nawaz Sharif.

In all meetings, officials and heads of financial institutions were appreciative of thegovernment's reforms, the foreign secretary said. "The US officials said the reform processhas had the desired effect and has created a lot of excitement in the investors' community tolook at Pakistan seriously for business." Under another initiative, the United States wouldinvite Pakistani businessmen and send "buyers mission" to spur trade prospects. "The UnitedStates is one of our largest trading partners and promotion of trade and investment has beenthe main theme of Prime Minister's official visit," Jilani said. He informed the media theWorld Bank has agreed to finance the Dasu power project.

"We have noticed a lot of positivity in the meetings," he said, adding that the US officialsappreciate Pakistan's focus on energy, economy and bringing good governance. "They see alot of seriousness and commitment on part of the government in addressing multifariouschallenges and the focus on good governance," Jilani said, when asked about the reasons forthis positivity towards the new government.

The foreign secretary reported the two sides have convergences on almost all issues. On theCapitol Hill, the Prime Minister also had a meeting with House Foreign Affairs Committeeled by Congressman Ed Royce. In his meetings, the diplomat said, Prime Minister Sharifraised the issue of drone operations on Pakistani territory, saying they are counterproductiveto efforts aimed at eliminating the menace of terror. The Prime Minister also raised theKashmir dispute while outlining his vision for regional peace to the American officials.

Copyright Associated Press of Pakistan, 2013



Biden reaffirms commitment to strong tiesOctober 24, 2013

US Vice President Joseph Biden Wednesday reaffirmed his country's commitment tostrengthening bilateral ties for a strong, democratic and prosperous Pakistan during abreakfast meeting with Prime Minister Nawaz Sharif. The discussion between the two leaderstook place at Biden's residence hours before President Barack Obama is due to hold wide-ranging discussions with Prime Minister Sharif at the White House on Wednesday afternoon.

Biden, a long time supporter of close US-Pakistan relationship, congratulated Nawaz Sharifon his historic election in May, which led to the first democratic transfer of power betweenelected governments in Pakistan's history. According to a White House statement, the UnitedStates Vice President "affirmed to the Prime Minister that together we must continue tocombat terrorism and violent extremism and work to strengthen regional and global security."

Biden and Nawaz Sharif also "discussed many of the economic and development challengesthat Pakistan faces and the steps the Prime Minister is taking to address them." The PakistaniEmbassy, in a statement, said both the leaders discussed "issues of mutual interest in thebilateral relationship as well as co-operation on issues of regional peace and stability."

"Both the leaders reaffirmed their keenness to work together to maintain the positivetrajectory in the bilateral relations and identified the revived Strategic Dialogue process as theideal vehicle to further strengthen a people-centric, broad-based and mutually beneficialrelationship," the statement said. They emphasised the need to focus on promoting co-operation in trade and investment, energy, education, science and technology sectors andstrengthening people-to-people contacts to realise the true potential of the relationship,according to the embassy.

Vice President Biden appreciated Pakistan's contribution and sacrifices in fighting thescourge of terrorism. "He praised Prime Minister Nawaz Sharif's leadership in promotingpeace and stability in the region and also acknowledged Pakistan's useful and important rolein facilitating peace and reconciliation in Afghanistan." The Prime Minister reiteratedPakistan's commitment to facilitate an Afghan-led and Afghan-owned peace process. Boththe leaders agreed on the need to further strengthen co-ordination and co-operation amongPakistan, the US and Afghanistan to ensure success of the reconciliation process.

Prime Minister Nawaz Sharif was accompanied by Advisor on National Security Sartaj Aziz,Finance Minister Ishaq Dar, Special Assistant Tariq Fatemi, Foreign Secretary Jalil AbbasJilani and Deputy Chief of Mission Asad Majeed Khan. The US side included AmericanAmbassador to Pakistan Richard Olson and other senior officials.




$1.6 billion aid part of annual fundingprocess: US embassyOctober 24, 2013

ALI HUSSAIN

The United States has expressed satisfaction over the positive development in bilateralrelationship with Pakistan that led to the decision to release $ 1.6 billion civilian assistanceand disbursement of $ 322 million under Coalition Support Fund (CSF) ahead of PrimeMinister Nawaz Sharif's visit to Washington.

"We are pleased by the positive developments in our bilateral relationship in recent months.We continue to work with the Pakistanis to tackle the many shared challenges facing us," saida spokesperson for the US Embassy here while responding to queries by Business Recorder.The development came ahead of Prime Minister Nawaz Sharif's ongoing visit to the US, tohold talks on wide-ranging issues with the Obama Administration.

The decision to release $1.6 billion in US civilian assistance was "part of our annual fundingprocess, throughout the course of this past summer the State Department notified Congress ofhow it planned to programme funds from several different accounts for various programmesin Pakistan," the spokesman added. Funding was notified to Congress following a rigorousplanning process over multiple months, to ensure funding was in line with both US andPakistani interests, and would deliver important results for both countries, he said, adding thatfinal notification occurred throughout the summer to allow time for all appropriateCongressional committees to be briefed and approved before the end of the fiscal year.

"While this is part of a long process of restarting security assistance co-operation afterimplementation was slowed during the bilateral challenges of 2011 and 2012, civilianassistance has continued uninterrupted throughout," he pointed out. "We continue to requestand receive approximately $1 billion a year in assistance for Pakistan, making it one ofAmerica's largest recipients of foreign assistance, a sign of our long-term partnership andcommitment", the spokesperson added.

He added that US civilian assistance to Pakistan has delivered real results on the issues mostimportant to Prime Minister Nawaz Sharif and all Pakistanis for co-operation in energy,education, and economic growth. About the Kerry Lugar Bill (KLB), the spokesperson saidthat the $7.5 billion envisioned under the KLB authorisation will take longer to allocate anddisburse than the five-year period originally envisioned. This does not diminish our long-termcommitment to the development of Pakistan's civilian institutions, he added. About therecently disbursed $322 million in Coalition Support Funds (CSF), he said that on October16, the United States government disbursed $322 million in CSF to Pakistan for the period ofJuly 2012 through September 2012.

He pointed out that the CSF disbursement is a routine step in reimbursing Pakistan forsupport provided and is a positive sign of co-operation on our shared national securitypriorities. In December 2012 the United States government reimbursed Pakistan foroperations for the period of June-November 2011, he said, adding that the reimbursementwas in the amount of $688 million.



In July 2012, he said the United States government reimbursed Pakistan for operations for theperiod of July 2010-May 2011 and the reimbursement was in the amount of $1.118 billion.The spokesperson further said that Pakistan has received over $10 billion since 2001.

Copyright Business Recorder, 2013

Pre- and post-tariff revision periods: PrimeMinister's task force to conduct billingauditOctober 24, 2013

A prime minister's task force has been constituted in the Ministry of Water and Power tocarry out a billing audit for pre- and post-tariff revision periods. The task force headed byAdditional Secretary of the Ministry, comprising four teams consisting of senior officialsfrom the Ministry of Water and Power, Pepco, Wapda and Distribution Companies willconduct its business in accordance with the following Terms of Reference (ToRs).

(i) conduct a random statistical survey of a given power distribution company by comparingunits billed in two months before and two months after, when tariff was revised by order; (ii)ascertain the trend which has developed in units billed in each of the consumers categoriesviz industrial, commercial and bulk as a result of change in tariff; (iii) select at least two'revenue circles; within a given power distribution company for the purpose of conducting onspot billing survey; (iv) select a suitable sample size from within the categories of intendedconsumers (industrial, commercial and bulk) for the purpose of making necessary analysis;(v) compile a well-structured report on the survey concerned on all areas of relevance andsubmit the same to the Additional Secretary in charge of the billing audit within a week ofconducting the survey. A team may co-opt any other official of a public sector enterprise ifhis/her assistance is deemed useful for attainment of objectives of the billing survey. -PR


KESC excluded: Discos' September tariffsraised by 32 paisa per unitOctober 24, 2013

MUSHTAQ GHUMMAN

National Electric Power Regulatory Authority (Nepra) has increased electricity tariffs ofDistribution Companies (Discos) by 32 paisa per unit for September 2013 under the monthlyfuel adjustment formula. The authority approved the increase after a public hearing in aresponse petition filed by the Central Power Purchasing Agency (CPPA). The increase wouldbe applicable on all distribution companies except for Karachi Electric Supply Company(KESC).



The CPPA in its petition submitted to the regulator stated that hydel generation in Septemberstood at 4,141.74 GWh and its share in total generation was 44.16 percent, but failed tomention the cost of generation. Generation from coal stood at 6.21 GWh at Rs 3.6118 perunit, generation from High Speed Diesel (HSD) was 115.84 GWh at Rs 23.0164 per unit,Residual Fuel Oil (RFO) 3,128 GWh at Rs 15.5711 per unit, generation from gas 1407.82GWh at Rs 4.8362 per unit, nuclear 431 GWh at Rs 1.3228 per unit, import from Iran 38.80GWh at Rs 10.55 per unit, mixed 91.05 GWh at Rs 8.4517 per unit and wind power 35.07GWh. Generation cost of wind power has not been mentioned in the tariff petition. Powergenerated from all sources stood at 9,378.82 GWh at Rs 59.90679 billion at a rate of Rs6.3875 per unit. After including other charges, the CPPA has revised fuel charges at Rs6.5469 per unit.

On the basis of data, the CPPA has sought an increase of Rs 0.2976 kWh over the referencefuel charges, ie, Rs 6.2493/kWh. Nepra had invited all the interested/affected parties to raisewritten/oral objections as permissible under the law at the public hearing. Pursuant to section31(4) of the Nepra Act (XCL of 1997) and mechanism for monthly fuel adjustmentprescribed by the authority in the tariff determinations of Discos, Nepra is authorised toreview and revise the approved tariff on account of any variations in the fuel charges onmonthly basis. The Supreme Court of Pakistan has already sought the record of publichearings.


Senate panel seeks details of payments toIPPsOctober 24, 2013

MUSHTAQ GHUMMAN

A three-member panel of Senate headed by Maula Baksh Chandio, former PPP Minister, onWednesday sought details of "Rs 480 billion" paid to Independent Power Producers (IPPs)and the source of the funding along with interest after the Director General (Finance)National Transmission and Dispatch Company (NTDC) exposed the Water and PowerMinistry by stating that NTDC is not aware of the source of funding.

However, Director General NTDC, Rehan informed the parliamentary team that Rs 270billion was paid to 28 IPPs before June 30, 2013. The IPPs were established under 1994 and2002 power policies. The director general NTDC said the amount to clear circular debt hadbeen arranged by the Ministry of Finance and NTDC was not aware of either the source offunds or the interest that might accrue in the event that the funds were borrowed.

Senator Nisar Muhmmad and Senator Khalida Parveen raised a number of queries regardinggeneration statistics, condition of transmission lines in interior Sindh, delay in projectsfunded by the Asian Development Bank and World Bank. The panel also sought agreementssigned with the IPPs under Power Policy 1994 and Power Policy 2002 so that theparliamentary body could inquire about incentives given to the private sector powercompanies. The panel also directed the Ministry of Water and Power to provide a month-wisethree-year record of generation statistics of IPPs.



Senator Nisar Muhammad argued that power generation was better in June 2013 prior to thepayment to the IPPs, adding the generation increased in July but then again declined slightlyin the months of August and September. The NTDC officials explained that the generationfrom IPPs and Gencos increased after payment was made to reduce inter-circular debt.However, the generation from IPPs has declined as plants are shut for annual maintenance, ona staggered basis, which will be completed by December 15, 2103. Senator Maula BakshChandio queried why electricity was not available in Sindh even after the government hadpaid billions of rupees to IPPs in one go and spent massive amount on improvements in thesystem. He criticised the government for not providing electricity even during summermonths. "I am from Sindh and cannot take on the federation run by the Punjabis as electricitysupply is even worse in Punjab," Chandio maintained; and jokingly added that he now backedthe Supreme Court's recent decisions relating to the power sector.

The panel also asked Additional Secretary Water and Power, Ijaz Ali Khan to provide latestfigures of inter-circular debt that had resurfaced after June 2013. Unofficially, Ministry ofWater and Power claims that circular debt has reached Rs 157 billion which also includes anunsettled amount of Rs 81 billion. One of the NTDC officials informed the committee thatdetermination of power tariff increase had not been implemented so far because the case wasstill being heard by the Supreme Court. He maintained that the circular debt could not becontrolled or eliminated until difference between cost of generation and sale price wasminimised.

The panel also criticised Chief Executive Officer of Hyderabad Electric Supply Company fornot attending the meeting of Senate's penal. Convenor of the panel, Senator Maula BakshChandio dubbed the CEO Hesco as a "Viceroy" and directed the company's officials toensure his presence in the next meeting. The panel expressed displeasure over theperformance of Hesco and Sesco with regarding to system improvement.




Taxation: Pakistan

Filing of IT returns: FBR extends date upto November 30October 24, 2013

The Federal Board of Revenue FBR has extended last date for filing of income taxreturns/statements for individuals, associations of persons (AOPs) and corporate sector up toNovember 30, 2013. The FBR issued an income tax circular 11 of 2013 here on Wednesdayregarding extension in the date of filing of income tax returns/statements for tax year 2013.

As per FBR, the date for filing of returns of total income/statements of final taxation ofcompanies whose tax year ends anytime between the 1st day of July, 2012 to 31st day ofDecember, 2012 due on or before September 30, 2013 and extended to October 31, 2013, ishereby further extended to 30th November, 2013. The date of filing of returns by otherpersons due on September 30, 2013 and extended to October 31, 2013, is hereby furtherextended to November 30, 2013, the FBR said.

The date of filing of returns of total income/statements of final taxation due on August 31,2013 and extended to October 31, 2013, is hereby further extended to November 30, 2013,the FBR added. Official sources said that the FBR has modified the FBR Web Portal toaccept the income tax returns and wealth statement without payment of 0.5 percent IncomeSupport Levy (ISL). The levy has been de-linked with the electronic return filing system inthe FBR Web Portal. The liability would stay (subject to the decision of the court) but thesystem would accept the returns and wealth statements without payment of the ISL, theyadded.


Import from China, South Korea andVietnam: new customs values for PETarpaulin issuedOctober 24, 2013

Directorate General of Customs Valuation Karachi has issued new customs values for importof "PE Tarpaulin" specifically from China, South Korea and Vietnam to accurately assess theduty. Sources told Business Recorder here on Wednesday that the directorate has issued avaluation ruling for determination of customs values of "PE Tarpaulin" under section 25-A ofthe Customs Act, 1969.

The customs value of "PE Tarpaulin" would be $2.50 per kg on import from China, $2.65 perkg on import from Korea and customs value of "PE Tarpaulin" would be $2.50 per kg onimport from Vietnam. In exercise of the powers conferred under Section 25-A of the Customs



Act, 1969, the Customs values of "PE Tarpaulin" are determined. The new ruling supersedesValuation Ruling No 474, dated 28-09-2012, sources said.

The Customs value of Tarpaulin was being determined under Section 25-A of ValuationRuling No 474 dated 28-09-2012. It was contested by a number of importers who filedreview applications under Section 25-D which were disallowed for technical reasons and onlegal ground. The Director General, however, directed to examine their contentions on meritas per law and associate them during exercise for determining revised Customs value.Accordingly the, importers were associated during the aforesaid exercise but they failed tosubmit valid and legally maintainable import documents to substantiate their viewpoint. Acomplaint by local manufacturers was also received by the Directorate General of CustomsValuation to the effect that the subject goods were being under-invoiced by the importers,causing revenue losses. This prompted an investigation to determine Customs Value ofimported "PE Tarpaulin".

To determine the Customs value, methods given in section 25 of the Customs Act 1969 werefollowed. Transaction value method provided in sub-section (1) of section 25 was foundinapplicable because sufficient information was not available. Identical/similar goods valuemethods provided in sub-section (5) and (6) of section 25 ibid were also not found applicablefor determination of the customs values due to unreliable and variable values. Deductivevalue method could not be followed. Computed value method provided in section 25(8) wasnot applicable; therefore Customs value of 'PE Tarpaulin' was determined under sub-section(9) of section 25 in the instant case, sources said.

The meetings were held with the stakeholders on 24-06-2013, 22-07-2013 and 24-09-2013. Incase where declared/transaction values are higher than the Customs value determined in thisRuling, the assessing officers shall apply those values in terms of sub-section (1) of Section25 of the Customs Act, 1969. In case of consignments imported by air, the assessing officershall take into account the differential between air freight and sea freight while applying theCustoms values determined in the Ruling.

The value determined vide the Ruling shall be the applicable Customs value for assessmentof subject imported goods until and unless it is rescinded or revised by the competentauthority in terms of sub-section (1) or (3) of section 25 of the Customs Act, 1969, the rulingmaintained.

A revision petition may be filed against this Ruling, as provided under Section 25-D of theCustoms Act, 1969 within 30 days from the date of issue before the Director General,Directorate General of Customs Valuation, 7th Floor, Customs House, Karachi. TheCollectors of Customs may kindly ensure that the value given in the Ruling is applied by thestaff concerned without fail, sources added.




SHC grants relief against payment of ISLOctober 24, 2013

SOHAIL SARFRAZ

The Sindh High Court (SHC) while allowing interim relief on petitions against IncomeSupport Levy has allowed relief to the general public at large from payment of ISL so as tomaintain uniformity; avoid any confusion and inconvenience to the taxpayers.

Deciding four different petitions on Wednesday, the SHC declared that the interim orderpassed in C.P.D.No.3757 of 2013 on October 10, 2013 shall also be applicable in the instantpetitions and shall apply in the case of other taxpayers as well to maintain uniformity and toavoid any confusion, inconvenience to taxpayers at large.

The High Court allowed the petitioners and all the taxpayers to submit their return of incomefor the Tax Year 2013 without filing computation and payment form in terms of IncomeSupport Levy Rules, 2013, and without making payment of the income support levy, whichmay be treated as a proper and valid return of income.

No adverse inference may be drawn against the petitioner and taxpayers at large in thisregard, whereas, no default surcharge to be levied till disposal off the petition, the SHC addedEarlier, the SHC had granted stay order on October 10, 2013 against the imposition of the 0.5percent ISL imposed through Finance Act, 2013.

The Lahore High Court (LHC) also in petitions filed by Syed Naveed Andrabi AdvocateSupreme Court allowed the petitioner to file his returns in manual form without filingcomputation and payment forms in terms of Income Support Levy Act, 2013 and withoutpayment of the said levy. Such manual returns if filed shall be entertained and processed inaccordance with law subject to the final outcome of this petition.


PaCCS rollout, $11.5 million payment: FBRbody to probe pact with AgilityOctober 24, 2013

The Federal Board of Revenue has constituted a high-level fact-finding inquiry committee toascertain the motive behind repeated extensions in the agreement with M/s Agility for rolloutof Pakistan Customs Computerised System (PaCCS) and payment of $ 11.5 million to thecompany.

Sources told Business Recorder here on Wednesday that Board-in-Council of the FBR hastaken a decision to constitute a fact-finding inquiry committee to find out the reasons whichled to rollout of PaCCS. The FBR has also made payments to the said company from time totime which also needs to be thoroughly examined. The whole issue would be examined onthe pretext that whether formal written contract was inked between the FBR and the said



company for making payments and rollout of PaCCS.

As per Board-in-Council decision, a fact-finding inquiry committee comprising FBR MemberCustoms, FBR Member (IT) and two other members has been constituted to find out as tohow all this happened; how the agreement with M/s Agility was extended from time to time;and how the amount of $ 11.5 million was paid to M/s Agility.

The Board-in-Council has directed the committee to take necessary action in this regard. TheBoard-in-Council has further directed the committee that the report of the fact-finding inquiryshall be submitted within 60 days. In May, 2005 PaCCS was launched (with limitedfunctionalities) at Karachi International Container Terminal (KICT) Karachi Port forautomated and paperless customs clearances. The said company was selected for thedevelopment of a software. The company had the mandate to review the business cycles,reengineer the business procedures and get it translated into a software. The duration of thecontract was seven months. The PaCCS, in a pilot mode, was later rolled out to two otherterminals, i.e., PICT and QICT, at Karachi Port without formal contractual arrangement, withthe company. Later the audit system of the PaCCS revealed that the system created as a Pilothad very limited functionalities. In 2010, the FBR asked the company to wind-up itsoperations in Pakistan.

The company claimed cost of its services given to the FBR for a period of around four years.In the meantime, the company filed a case before the International Centre for Settlement ofInvestment Disputes (ICSID), FBR forcing to defend its case at international level.


WeBOC improvement: Commission makeskey recommendationsOctober 24, 2013

One-man commission in its fact-finding report regarding 'smuggling of arms and ammunition'has recommended that a dedicated team of tax experts/software engineers may be deputed toensure that all the goods declarations processed by WeBOC have all the automatic dataexchange linkages with other computer systems of Federal Board of Revenue (FBR).

Sources told Business Recorder here on Wednesday that the former FBR Member Customs,Ramzan Bhatti has made valuable recommendations on improving the working of theWeBOC clearance system. Referring to the report, sources said that presently there arestandalone computer systems for each tax to be collected by the FBR. Customs duties andother taxes which form about 40 percent of total taxes are realised through processing goodsdeclarations under the "WeBOC Computer System" and One-Customs System," bothdeveloped by Pral. These two systems are neither dovetailed nor are the data mirrored on realtime basis. All the vessels information reports (VIR) are electronically received by theWeBOC which processes about 90 percent of the goods declarations. The rest of the goodsdeclarations are processed through the One-Customs. The commission has been informed thatthe WeBOC System has been audited by two different organisations but no audit reports weremade available. Neither any follow-up action of audit reports was communicated.



The commission has studied the WeBOC System in short span of time and is of the view thatRequirements Specification Document (RSD) needs to be reviewed by a team of tax expertswith a view to making it a comprehensive system based on EDIFACT (Electronic DataInterchange for Administration, Commerce and Trade). A dedicated team of tax experts andsoftware engineers may be deputed to ensure that all the goods declarations be processed byWeBOC with the facility of back and forth automatic linkages/exchange of data with theother computer software systems of the FBR. In the long run the FBR should have oneintegrated software system for all taxes with facility of real time exchange/tabulation of datawith respect to all activities of a tax registered person, sources said.

Quoting the report of the commission, sources were of the view that the Project Director(WeBOC) works in solitary environment. He has neither been declared as masters of theprograms nor assigned any password/user ID to oversee the development and actual workingof the software. He has even no qualified software auditor to help him in ascertaining theefficacy of the developed and operational software. Instead, the Pral is left to develop andmaintain the software. It is learnt that even Pral has no qualified software auditor to ensurethat the software developed is comprehensive and meets all the requirements of the users. It isof considered opinion that Pral has failed in developing integrated software for the FBR, asno technical team of tax experts assist the Pral in developing the software. There is no onlineaudit facility or management information system which generates alarms in cases of anymeddling with system by the unscrupulous persons/users. There are no backward and forwardlinkages or automated transfer of data from one system to another systems, ie, from One-Customs/WeBOC to Crest of Sales Tax and Mahasil and newly created provincial revenueauthorities. There is no evidence to find out that the computer software had ever pointed outthe evasion/leakages of revenues. The experience shared by the users was that each time Pralcome up with different information on the same subject whenever inquires are made, sourcesadded.




Taxation: World

Big companies push back against G20 taxavoidance planOctober 24, 2013

Big companies have pushed back against an international drive to crack down on corporatetax avoidance, documents published by the body charged with drafting new rules showed onWednesday. The Paris-based OECD published letters from European companies includingDiageo and Gazprom and groups representing the biggest US multinationals asking it toreconsider proposed measures on transparency and on tackling tax avoidance, saying theplans could hit trade and investment.

But the head of the OECD's Centre for Tax Policy said that, while the body would listen tocompanies, they had to realise change was on its way. "Sometimes I fear that businessconsiders that it is business as usual, and it's not business as usual, and a number of businesspeople, at some point, will have to understand that," Pascal Saint-Amans said in a telephoneinterview.

Big budget deficits and revelations that companies like Apple and Google use structures thatlawmakers have labelled "contrived" to avoid billions of dollars in taxes, have led to growingcalls to close corporate tax loopholes. The companies say they follow the existing tax rules.In September, the Group of 20 (G20) major developed and developing economies backed anOECD draft plan that advocated allowing countries to ignore inter-company contracts whichwere aimed at channeling profits into tax havens.

Businesses oppose giving tax authorities greater rights to "recharacterise" transactions - thatis, to insist that profits be declared where the economic activity that generates the profit takesplace, rather than where inter-company agreements say it belongs. "The surprisingly frequentreferences to "re-characterisation" in the draft are, in our view, largely unnecessary, and mayin their totality convey the wrong message," Paul Fox, Tax Director at British drinks groupDiageo wrote, in reference to planned new rules on inter-company payments for the right touse company brands and other intellectual property.

Similar views were expressed by Russian gas producer Gazprom , while the US NationalForeign Trade Council, which represents over 300 companies including General Electric andGoogle, questioned the "premise that the profits of a multinational enterprise ought to beallocated across jurisdictions in proportion to employees or tangible assets". The companiessaid the existing practice of recognising inter-company transactions gave business greatercertainty and encouraged trade by helping ensure the same profits were not taxed more thanonce.

Copyright Reuters, 2013



EU lawmakers reject subsidies for newfishing boatsOctober 24, 2013

Fishermen will not get European Union subsidies to build new vessels for the bloc's alreadyswollen fleet, EU lawmakers agreed on Wednesday, in a vote that raised hopes for an end todecades of over-fishing in Europe. Voting on how to allocate nearly 1 billion euros ($1.4billion) in annual fisheries subsidies up to 2020, the European Parliament said more moneyshould be spent on assessing the state of Europe's depleted stocks and measures to clampdown on illegal fishing.

If confirmed in talks with governments, the proposals could spell relief for the estimated 75percent of EU fish stocks that the European Commission says are over-fished. The EuropeanUnion scrapped subsidies for new boats nearly a decade ago, but French and Spanishparliamentarians backed by their powerful domestic fishing fleets led a push to reintroducethe payments.

Conservation groups largely backed the parliament's position, though there was still a risk theproposals would be watered down in negotiations with member states. "This can help makesustainable EU fisheries a reality, as long as governments follow the direction that parliamentset," said Saskia Richartz, EU fisheries policy director for Greenpeace. Some Liberal andGreen lawmakers criticised a decision to allow a limited amount of EU funds to be used toupgrade existing vessels - for example by fitting them with new engines. "Modern enginescan do the job more effectively than old ones, and so increase the catching capacity of thefishing fleet without creating any new jobs," British Liberal MEP Chris Davies said in astatement.




Business & Economy

FPCCI asks for extension of date for filingincome, wealth tax returnsWednesday, 23 October 2013 17:56

Posted by Imaduddin

ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industries (FPCCI)urged the Federal Board of Revenue to extend the last date for filing Income and Wealth TaxReturns in view of the Eid holidays.

In a statement issued by Gulzar Firoz, Acting President of the FPCCI here on Wednesday, itwas pointed out that October 30, 2013 is the last date for filing income and wealth taxreturns.

However, due to the long Eid break, the country's business houses have not been able tofinalize their tax returns.

In view of the above, FPCCI has called for the deadline for filing income and wealth taxreturns to be extended up to November 15, 2013 in order to allow the business community tofile their tax returns conveniently.

Copyright APP (Associated Press of Pakistan), 2013

Pakistan envoy sees visible improvement ininvestment ties with MalaysiaWednesday, 23 October 2013 17:55

Posted by Imaduddin

ISLAMABAD: Pakistan expects to see a visible improvement in investment relationship with

Malaysia in the next one year amid the new government's pro-business policies, says Pakistan

High Commissioner to Malaysia, Shahid M.G. Kiani in an interview with state-owned

Bernama News Agency of Malaysia.

He said the government, led by Prime Minister Nawaz Sharif, aimed to woo foreign

investments to revejunate the economy and restore investor confidence by offering various

incentives,says a message received from Pakistan High Commission to Kuala Lumpur

(Malaysia) here today.



"Pakistan has a robust trading relationship with Malaysia for over 56 years and now we are

focusing on boosting the relation."I'm sure there will be a visible improvement in

investment," he said.

Besides welcoming investments from Malaysia, Kiani said, the Pakistani government was

also keen to learn from Malaysian government institutions like the Employees' Provident

Fund, Permodalan Nasional Bhd and Tabung Haji.

"We don't have such investors supported by the government (in Pakistan), therefore we are

keen to work and learn as there are serious considerations to set up similar agencies in

Pakistan," he said.

Kiani said Minister in the Prime Minister's Department, Datuk Seri Idris Jala, also visited

Pakistan recently to assist and advise the government on improving the systems in the

government and public corporations.

He said Malaysia was the largest foreign investor in Pakistan with US$656 million in 2008.

It, however, declined sharply to US$2.3 million in 2012 due to economic difficulties in

America and Europe, he said.

Nevertheless, he said, there were economic opportunities amid the current difficulties as

Pakistan was a fast-developing country with huge population and needed capacity to support

its development.

Kiani said with the Pakistan government's commitment to bring stability and open trade

policy, Malaysian investors should start explore the wide-ranging business and investment

opportunities in Pakistan.

"There are also Pakistani companies willing to venture and invest abroad.

"Therefore we need to share the opportunities available in Malaysia.

"On the other converse, Malaysian companies could use Pakistan as the export platform amid

its abundant raw materials and cheap labour," he said.

He said among the potential industries to watch in Pakistan were infrastructure and

construction, property development, agriculture and livestock as well as energy.

The high commissioner said most Pakistani companies were keen on joint-ventures and this

will help Malaysian companies to easily expand into Pakistan.

Kiani said among the industries that Pakistani firms were interested in Malaysia were medical

devices, tools and machinery as well as Islamic banking and capital market.

PAK LAW PUBLICATIONEMAIL # 242-2013

Mail to: [email protected]

Kiani said Pakistan's Honorary Consul

identify potential investments in the r

medical devices.

He said there were plans to organise Kinnow Mandarin fair in Penang in early January next

year to tap the growing market, especially during the Chinese New Year. Kinnow Mandarin,

the premier citrus fruit of Pakistan, is cultivated extensively in Punjab.


Indonesian businessmen can benefit byenhancing economic cooperationWednesday, 23 October 2013 16:54

Posted by Imaduddin

26

ISLAMABAD: Indonesia's Ambassador to Pakistan, Burhan Muhammad has said Pakistan isa land of opportunities and Indonesian businessmen can benefit by enhancing trade andeconomic cooperation.

"Pakistan is a gateway to Central Asia, Afghanistan and Western ChiPakistan portrayed by western media is misleading as the general security situation is not asbad as portrayed by media," he said while addressing a signing ceremony held at MercantileClub, Jakarta.

Karachi Chamber of Commerce and IndustrIndustry (JCCI) signed a Memorandum of Understanding for mutual cooperation to enhancebilateral trade and extend facilitation to members of respective chambers.

Ambassador Burhan invited Indonesian businessmenthemselves, adding that Indonesia and Pakistan being first and second largest Muslim countryshould trade with heart and empathy.

He also termed 2013 as historical year in bilateral trade relations between the two countries.

He said by awarding Pest Free Area Recognition Certificate for Pakistan Kinnow andallowing entry through Tanjung Priok Port of Jakarta, all impediments in effectiveimplementation of IP-PTA from September 1, 2013 were removed and this MoU will furtherenhance bilateral trade.

President of the KCCI, Aamir Abdullah Zaki and President of JCCI Eddy Kuntadi signed theMoU.

Indonesia's Ambassador to Pakistan, Pakistan's Charge d Affairs to Indonesia, Syed SajjadHaider and Consul General of Indonesia in Karachi,

News Alerts

[email protected]

Kiani said Pakistan's Honorary Consul-General to Penang, Datuk Abdul Rafique Karim, will

identify potential investments in the region, especially in high-technology manufacturing and



remier citrus fruit of Pakistan, is cultivated extensively in Punjab.


Indonesian businessmen can benefit byenhancing economic cooperationWednesday, 23 October 2013 16:54

AMABAD: Indonesia's Ambassador to Pakistan, Burhan Muhammad has said Pakistan isa land of opportunities and Indonesian businessmen can benefit by enhancing trade and

"Pakistan is a gateway to Central Asia, Afghanistan and Western China. The image ofPakistan portrayed by western media is misleading as the general security situation is not asbad as portrayed by media," he said while addressing a signing ceremony held at Mercantile

Karachi Chamber of Commerce and Industry (KCCI) and Jakarta Chamber of Commerce andIndustry (JCCI) signed a Memorandum of Understanding for mutual cooperation to enhancebilateral trade and extend facilitation to members of respective chambers.

Ambassador Burhan invited Indonesian businessmen to come to Pakistan and see itthemselves, adding that Indonesia and Pakistan being first and second largest Muslim countryshould trade with heart and empathy.


He said by awarding Pest Free Area Recognition Certificate for Pakistan Kinnow andallowing entry through Tanjung Priok Port of Jakarta, all impediments in effective

PTA from September 1, 2013 were removed and this MoU will further

President of the KCCI, Aamir Abdullah Zaki and President of JCCI Eddy Kuntadi signed the

Indonesia's Ambassador to Pakistan, Pakistan's Charge d Affairs to Indonesia, Syed SajjadHaider and Consul General of Indonesia in Karachi, Rossalis Adenan and Ms. Maria Kazi,

24 October 2013

Page 21

General to Penang, Datuk Abdul Rafique Karim, will

technology manufacturing and



Indonesian businessmen can benefit by

AMABAD: Indonesia's Ambassador to Pakistan, Burhan Muhammad has said Pakistan isa land of opportunities and Indonesian businessmen can benefit by enhancing trade and

na. The image ofPakistan portrayed by western media is misleading as the general security situation is not asbad as portrayed by media," he said while addressing a signing ceremony held at Mercantile

y (KCCI) and Jakarta Chamber of Commerce andIndustry (JCCI) signed a Memorandum of Understanding for mutual cooperation to enhance

to come to Pakistan and see itthemselves, adding that Indonesia and Pakistan being first and second largest Muslim country


He said by awarding Pest Free Area Recognition Certificate for Pakistan Kinnow andallowing entry through Tanjung Priok Port of Jakarta, all impediments in effective

PTA from September 1, 2013 were removed and this MoU will further

President of the KCCI, Aamir Abdullah Zaki and President of JCCI Eddy Kuntadi signed the

Indonesia's Ambassador to Pakistan, Pakistan's Charge d Affairs to Indonesia, Syed SajjadRossalis Adenan and Ms. Maria Kazi,



Commercial Secretary of Pakistan to Indonesia were present on the occasion along withoffice bearers of Jakarta Chamber, officials from Ministries of Foreign Affairs and KCCIChairman of Special Committee for Liaison with International Chambers and MoUsImplementation, Junaid Esmail Makda.

President KCCI Aamir Abdullah Zaki said bilateral trade relations between Pakistan andIndonesia were expanding rapidly as both the governments had been working seriously andsincerely for implementing Preferential Trade Agreement (PTA) and were looking forward toturn this PTA into Free Trade Agreement (FTA) in near future.

He termed the MoU an outcome of efforts of both countries and an extension of PTA.

He said KCCI is largest Business Chamber of Pakistan having 19000 members, being leadingchamber in South Asia. He said PTA and FTA will increase bilateral trade between the twocountries in an enormous way.

He welcomed the proposed next initiatives including currency swap agreement.

President of JCCI termed Pakistan as a non-traditional market for Indonesia as their trade isconfined to 15 countries mainly including ASEAN, United States, Japan, China, SouthKorea, Australia and Canada etc.

He invited Indonesian businessmen to trade with Pakistan and said bilateral trade wasexpected to increase by US $ 1 billion by 2014.

The MoU defines a number of actions, aimed to further strengthen bilateral trade includingexchange of trade delegations, participation in exhibitions, exchange of information speciallytrade inquiries, joint meetings, joint lobbying with both governments for FTA, agreement oninvestment, taxation and business visa recommendations.


Sunflower cultivation on 1.75 lakh acres inPunjabWednesday, 23 October 2013 12:34

Posted by Parvez Jabri

SIALKOT: Efforts were afoot to bring over 1.75 lakh acres of land under oilseed providingSunflower crop in various areas of Punjab, informed Agriculture department officials.

Under a special directive of Punjab government, a detailed plan for the promotion ofsunflower crop in the province has been chalked out.

In Sialkot district, Sunflower would be cultivated on 4000 acres of land. The tehsil wisebreak-up is: Sambrial 1500 acres, Daska 200 acres, Pasrur 2000 acres and Sialkot tehsil 200acres.

PAK LAW PUBLICATIONEMAIL # 242-2013

Mail to: [email protected]

Sources in Agriculture department told APP on Wednesday that under the plan growerswould be motivated to bring maximum land under sunflower crop cultivation in order to copewith the domestic needs of edible oil.

Currently, only 30 percent edible oil is being produced within the country and 70 percentbeing imported to meet domestic needs every year,source said.

Sunflower seeds have 40 percent oil content, and farmers could derive economic benefhelp in enhancing production of edible oil in the country, sources added.

However, experts have advised the growers to use only recommended and authenticatedvariety of sunflower seeds for getting maximum output and follow the guidelines provided bagriculture department.


New entrant policy for motorcyclesindustry: No additional custom duty to bechargedWednesday, 23 October 2013 10:46

Posted by Shoaib-ur-Rehman Siddiqui

46

ISLAMABAD: The Federal Board of Revenue (FBR) will not charge the additional customsduty on sub-components and components, imported in any kit form by a new entrantassembler or manufacturer of motorcycles in Pakistan.

In this regard, the FBR has issued SRO.939(I)/2013notify duty concessions for the manufacturers of motorcycles in line with the new entrantpolicy for motorcycles manufacturing industry applying new technology.

Through these notifications, the FBR has amended SRO 656(and SRO 693(I)/2006, dated July 1, 2006.

According to SRO 939(I)/2013, in line with the new entrant policy for motorcyclemanufacturing industry with new technology notified by Ministry of Industries andProduction vide Notification No. 4the additional customs-duty leviable under this notification shall not be charged on subcomponents and components, imported in any kit form by a new entrant assembler ormanufacturer, for assembly or manufacturing of motorcycles classified under PakistanCustoms Tariff (PCT) heading 87.11 specified for a period of five years from the start ofassembly or manufacturing with new technology. This is subject to the fulfillment of certainconditions.

News Alerts

[email protected]

Sources in Agriculture department told APP on Wednesday that under the plan growerswould be motivated to bring maximum land under sunflower crop cultivation in order to cope

eeds of edible oil.

Currently, only 30 percent edible oil is being produced within the country and 70 percentbeing imported to meet domestic needs every year,source said.

Sunflower seeds have 40 percent oil content, and farmers could derive economic benefhelp in enhancing production of edible oil in the country, sources added.

However, experts have advised the growers to use only recommended and authenticatedvariety of sunflower seeds for getting maximum output and follow the guidelines provided b


New entrant policy for motorcyclesindustry: No additional custom duty to be

Wednesday, 23 October 2013 10:46

Rehman Siddiqui

Federal Board of Revenue (FBR) will not charge the additional customscomponents and components, imported in any kit form by a new entrant

assembler or manufacturer of motorcycles in Pakistan.

In this regard, the FBR has issued SRO.939(I)/2013 and SRO.940(I)2013 here on Tuesday tonotify duty concessions for the manufacturers of motorcycles in line with the new entrantpolicy for motorcycles manufacturing industry applying new technology.

Through these notifications, the FBR has amended SRO 656(1)/2006, dated June 22, 2006and SRO 693(I)/2006, dated July 1, 2006.

According to SRO 939(I)/2013, in line with the new entrant policy for motorcyclemanufacturing industry with new technology notified by Ministry of Industries and

ation No. 4-1/2013/LED-II-(Vol-III), dated the 26th September, 2013,duty leviable under this notification shall not be charged on sub

components and components, imported in any kit form by a new entrant assembler orr assembly or manufacturing of motorcycles classified under Pakistan

Customs Tariff (PCT) heading 87.11 specified for a period of five years from the start ofassembly or manufacturing with new technology. This is subject to the fulfillment of certain

24 October 2013

Page 23

Sources in Agriculture department told APP on Wednesday that under the plan growerswould be motivated to bring maximum land under sunflower crop cultivation in order to cope

Currently, only 30 percent edible oil is being produced within the country and 70 percent

Sunflower seeds have 40 percent oil content, and farmers could derive economic benefits and

However, experts have advised the growers to use only recommended and authenticatedvariety of sunflower seeds for getting maximum output and follow the guidelines provided by

New entrant policy for motorcyclesindustry: No additional custom duty to be

Federal Board of Revenue (FBR) will not charge the additional customs-components and components, imported in any kit form by a new entrant

and SRO.940(I)2013 here on Tuesday tonotify duty concessions for the manufacturers of motorcycles in line with the new entrant

1)/2006, dated June 22, 2006

According to SRO 939(I)/2013, in line with the new entrant policy for motorcyclemanufacturing industry with new technology notified by Ministry of Industries and

III), dated the 26th September, 2013,duty leviable under this notification shall not be charged on sub-

components and components, imported in any kit form by a new entrant assembler orr assembly or manufacturing of motorcycles classified under Pakistan

Customs Tariff (PCT) heading 87.11 specified for a period of five years from the start ofassembly or manufacturing with new technology. This is subject to the fulfillment of certain



Firstly, the new entrant assembler or manufacturer shall achieve the annual localisation orindigenisation targets / levels in accordance with the localisation, plan spreading over amaximum period of five years, duly approved by Ministry of Industries and Production.

Secondly, the additional customs-duty shall be levied on the sub-components andcomponents which become localised/ indigenised by the new entrant assembler ormanufacturer, in accordance with the said localisation plan.

Thirdly, the new entrant shall abide by all the terms and conditions laid down in separatenotifications issued by the Ministry of Industries and FBR for assembly or manufacturing ofmotorcycles and the expressions ‘new technology’ and ‘new entrant’ shall bear the samemeaning as declared or notified by the Ministry of Industries and Production in respect ofMotorcycle Manufacturing Industry.”

Under SRO 940(I)/2013, in line with the new entrant policy for motorcycle manufacturingindustry with new technology notified by Ministry of Industries and Production videnotification No. 4-1/2013/LED- II(Vol-III), dated September 26, 2013, the incentive ofimporting CKD kit in any form @ 10% customs-duty imported by the new entrant forassembly or manufacturing of motorcycles shall be withdrawn on components localised bythe new entrant each year in accordance with the approved localisation plan. The expressions‘new entrant’ and ‘new technology’ shall bear the same meaning as declared or notified bythe Ministry of Industries and Production in respect of motorcycle manufacturing industry.


Growth target needs downward revision:PCWednesday, 23 October 2013 10:44

Posted by Shoaib-ur-Rehman Siddiqui

ZAHEER ABBASI

ISLAMABAD: Planning Commission said on Tuesday that projected GDP growth target of4.4 percent for the current fiscal year is difficult to achieve and it requires a downwardrevision.

This was revealed by Secretary Planning Commission Hassan Nawaz Tarar during the firstmeeting of the Advisory Committee convened to solicit proposals from private sector,academia and parliamentarians for the short and long-term development plans to revivegrowth and development.

In his presentation, the Chief Economist of the Planning Commission presented a very bleakpicture of the country performance in terms of global competitiveness and doing business. Hesaid that uncertain business climate was one of the major factors responsible for decrease ininvestment and the country was ranked far below in global competitiveness as compared toother regional countries.



“The electricity situation, corruption and various other factors have been responsible fordecline in global competitiveness and for poor rating in doing business. The shortfall ofelectricity causes about two percent GDP loss annually,” he said.

He also highlighted in his presentation that growth rate in Pakistan, unlike other regionalcountries, was on decline during the last few years, which was alarming and required tocreate employment opportunities for youth with reduction in poverty. The growth rateremained three to 3.5 percent during the last few years and must be increased, touching sevento eight percent to cater to a huge youth coming out of educational institutions foremployment.

Secretary Planning Commission said that 4.4 percent growth rate was approved by theNational Economic Council (NEC) at the time of presentation of budget, which requiredrevision in the given circumstances.

An official said the projected target of cotton crop had been revised downward subsequent tothe floods in Punjab and Sindh. Minister for Planning and Development Ahsan Iqbal saidthere was a marginal positive growth in the manufacturing sector whereas energy crisis andserious financial constraints were immediate challenges which had propelled the country tothe verge of economic disaster.

The Minister said the growth rate in neighbouring countries was five to seven percent despiteglobal financial crisis but it dipped to two to three percent in Pakistan due to failure of properplanning. He said the Advisory Committee of the Planning Commission was constituted bythe Prime Minister with inclusion of private sector, academia and parliamentarians forparticipatory and collaborative planning to put the country on high growth path. Rulingparty’s member National Assembly Qaiser Ahmed Sheikh said that business community hadserious reservations about the budget.




Cotton and Textiles: Pakistan

Cotton market: prices remain steady amidstrong demandOctober 24, 2013

Steadier trend persisted on the cotton market on Wednesday as millers and spinners stuckwith new deals in expectations of improvement in their profit, dealers said. The official spotrate was unchanged at Rs 6900. Prices of seed cotton in Sindh per 40 kg (low type) were inertat Rs 2200, while the good type was lower by Rs 50 to Rs 2900. In Punjab low type showedno change at Rs 2800, while the best quality gained more Rs 50 to Rs 3100, dealers said. Inthe ready session, around 23,000 bales of cotton changed hands between at Rs 5900-7100,they said.

Expectations for improvement in business activity propelled mills to make new deals, saidcotton analyst Naseem Usman. He further said Pakistani exporters in China exhibition hadreceived some contracts but at the lower rate. Furthermore, exports of bed-wear and ready-made garments improved in the first quarter of current fiscal year, which was a good signunder those circumstances, other analysts said.

Devaluation of the Pak rupee and slight improvement in the power supply helped thespinning mills and industries to run the wheels. According to the Reuters, the NY cottonfutures closed at near seven-week lows in New York on Tuesday as players awaited moreclarity on the US harvest of the fiber amid signs of a bumper crop in India.

Cotton's traded volume on ICE Futures US was about half of the 30-day average, accordingto preliminary Thomson Reuters data, as the market ended with a third losing session in arow. ICE's most-active December cotton contract closed down 0.61 cent, or 0.7 percent, at82.45 cents a lb, after a session low at 82.44. It was the market's lowest close sinceSeptember 5.

The following deals were reported as 2,000 bales from Khair Pur at Rs 6900/6950, 1,400bales from Upper Sindh at Rs 6900/6950, 2,000 bales from Khair Pur (BCI) at Rs 7000,2,000 bales from Upper Sindh (BCI) at Rs 7000, 400 bales from Gojra at Rs 6900, 800 balesfrom Vehari at Rs 6925/6950, 400 bales from Jhang 6925, 400 bales from Hasil Pur 6925,400 bales from Fort Abbas 6950, 400 bales from Burewala 6950, 400 bales from Khanewal6950, 400 bales from Jalal Pur 7000, 3,600 bales from Haroonabad 7000, 1,800 bales fromFazil Pur 7000, 1,000 bales from Ali Pur 7000, 1,000 bales from Layyah 7000, 400 balesfrom Garh Mor 7000, 400 bales from Mian Chano 7025, 1,200 bales from Rajan Pur7050/7075, 1,600 bales from Mian Wali at 7100, they added.

===========================================================================The KCA Official Spot Rate for Local Dealings in Pak Rupees---------------------------------------------------------------------------FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"---------------------------------------------------------------------------MICRONAIRE VALUE BETWEEN 3.8 TO 4.9NCL===========================================================================



Rate Ex-Gin Upcountry Spot Rate Spot Rate DifferenceFor Price Ex-Karachi Ex. KHI.As Ex-Karachion 22.10.2013===========================================================================37.324 Kgs 6,900 155 7,055 7,055 NIL---------------------------------------------------------------------------Equivalent---------------------------------------------------------------------------40 Kgs 7,395 155 7,550 7,550 NIL===========================================================================

Government urged to take notice of'misuse' of cotton cessOctober 24, 2013

Central Chairman APTMA, M. Yasin Siddik, has drawn government's attention towards thealleged misuse of cotton cess by the Pakistan Central Cotton Committee (PCCC). Also, anAPTMA nominee as Vice President of PCCC should be installed without delay, he added. Hedemanded an immediate third-party audit of the PCCC funds and inquiry into itsmisappropriation and misuse as there is no audit Sub-Committee and no internal auditfunction in place.

He said the APTMA had proposed a Centre of Excellence at the CCRI Multan throughrestructuring of PCCC by strengthening and activating it to pursue a dynamic cotton researchand development programme to boost cotton production and its quality in the country.

Accordingly, APTMA had agreed to increase Cotton Cess from Rs 20 per bale to Rs 50 perbale subject to the condition that the PCCC will be managed professionally to undertakestate-of-the-art cotton research centre. He said APTMA had engaged M/s A. F. Ferguson &Co, Chartered Accountants (Member Firm of PricewaterhouseCoopers) to prepare a plan torestructure PCCC on modern lines.

He said the objective of restructuring of PCCC was to increase cotton lint yield to1000kg/hectare, achieve 25 million cotton bales by 2020, sustainable cotton research throughpublic private partnership, synergy with international research institutes for technologycollaborations, technology transfer and development of high yield/disease/pest resistant,region specific, vertical and hybrid cotton seed.

Siddik said that "APTMA was perturbed over the stagnant crop size of cotton which is a clearbarometer of the effectiveness of the PCCC and no improvement in per acre yield for the lastseveral years, had voluntarily offered to pay Cotton Cess more than double the amount beingdeducted as it was extremely concerned over no improvement in cotton crop." Yasin addedthat country's per acre yield and cotton crop remain dismal.

In the year 2000-01 crop size of India was 14 million bales of 170kgs whereas it was 10.681million bales as far as Pakistan was concerned. Similarly, increase in yield per hectare for thesame period in case of Pakistan was only 23 per cent primarily because of the use ofunauthorised BT seed whereas for India it was 75 per cent, he added.

Pakistan Institute of Cotton Research & Technology (PICR&T) carries out external testing of



fiber. As this institute is not operative therefore, equipments worth millions of rupees havebeen placed in junk yard and its 31 employees are carrying out minimal work, he added.

Further, PCCC does not have a separate biotech lab for conducting present day cottonresearch. In addition, various research functions are not properly established includingVirology, Chemical Studies and Farm Management. Meanwhile, Chairman APTMA PunjabS M Tanveer has urged Chief Minister Punjab to intervene to save the institution of cottonresearch to increase cotton production from 13 million bales to 25 million bales by 2020, as70 per cent cotton production and consumption exist in Punjab.


Christmas buyings help boost exports toEU, USOctober 24, 2013

Buying for Christmas celebrations in Europe and the US has pushed up Pakistan readymadegarments exports by $56.607 million in July-September period of the current fiscal year,exporters said on Wednesday. "Exports of apparel products to Europe and the US grew thisfiscal year for demand ahead of Christmas season," they said, adding the country's readymadegarments showed a good exports growth.

Pakistan exported $477.067 million of readymade garments to the world markets during July-September period this fiscal year as compared to the garments exports of $420.46 million inthe same period last fiscal year, showing an increase of $56.607 million (13 percent),according to Pakistan Bureau of Statistics (PBS). In terms of volume, the country's garmentsexports mounted to 7,389, 000 dozens during July-September period of current fiscal year ascompared to its exports of 6,768, 000 dozens in the same period last fiscal year, rising by621, 000 dozens (9.18 percent), according to the statistics.




Agriculture and Allied: Pakistan

Khyber Pakhtunkhwa governmentpromotes doctors, agriculture officialsOctober 24, 2013

The government of Khyber Pakhtunkhwa on the recommendations of Provincial SelectionBoard has promoted Dr Nisar Ahmad and Dr Khalid Farooq, Principal Dental Surgeons (BS-19) of Health Department to Chief Dental Surgeons (BS-20) on a regular basis withimmediate effect.

They would remain on probation for a period of one year and consequent upon the promotionDr Nisar Ahmad BS-20, BBS Teaching Hospital Abbottabad has been transferred and postedat Lady Reading Hospital Peshawar against a vacant post of BS-20 in general cadre, while DrKhalid Farooq BS-20, King Abdullah Teaching Hospital Mansehra has been transferred andposted at Khyber College of Dentistry Peshawar against a vacant post of BS-20 in generalcadre.

Similarly, the KP government on the recommendations of the Provincial Selection Board hasalso promoted Saadullah Khan and Abdur Rashid, officers of Agriculture Department fromBS-19 to BS-20 on regular basis with immediate effect. The promoted officers will remain onprobation till their retirement.

Consequent upon the above, the following postings/transfers are hereby ordered henceforth:Saadullah Khan BS-20, Director Horticulture HQ Peshawar has been transferred and postedas Principal, Agriculture Training Institute, Peshawar, against the vacant post and AbdurRashid BS-20, Director General, Agriculture Extension, KP has been transferred and postedas Director General, Agriculture Extension, KP.


Rabi Festival begins todayOctober 24, 2013

The University of Agriculture Faisalabad (UAF) is organising a four-day Rabi Festival fromThursday to Sunday. It will bring colourful events including agricultural exhibition, farmerconvention, cultural programmes, international and national seminars and many more.

The festival is aimed at promoting latest agricultural practices to increase the agriculturalproductivity. It also provides an opportunity to the farming community and agriculturalexperts to sit together and make strategy to boost production.As per details, seminar on roleof rural women in agricultural entrepreneurship will be held at New Senate Hall and Mehfil-e-Milad at Iqbal Auditorium. Inauguration of Agricultural Exhibition will be held at D-Ground on Friday. A seminar on 'climate changes and food security' will take place at NewSenate Hall and cultural programme at Iqbal Auditorium.




Gold import soars: 380.47 percent in firstquarter of current fiscalOctober 24, 2013

ZAHEER ABBASI

Gold import has witnessed an unprecedented increase of 380.47 percent during the firstquarter of the current fiscal year compared to the same period of last year, according toPakistan Bureau of Statistics (PBS). Provisional trade figures reveal that gold import of 3,286kilograms during July-September 2013-14 against 542 kilograms for the same period of lastyear, showing a massive increase.

The country imported gold worth $136.521 million in the first quarter against $2.684 millionfor the same period a year ago. The country imported construction machinery of $101.95million during July-September 2013 period against $44.940 million for July-September 2012,showing an increase of 126.87 percent. Import of electrical machinery and apparatus alsowitnessed an increase of 70.32 percent following import of $294.233 million in the threemonths of current fiscal year against $172.805 million for the same period of last year.

Food group imports have decreased by 11.91 percent during the first quarter of current fiscalyear as compared to the same period of last year subsequent to 38.81 decline in import ofpulses, 28.89 percent in milk cream and milk food for infants, 29.40 percent decrease in soyabean oil and 21.26 percent in palm oil imports. Import of spices decreased by 17.67 percentand tea 4.19 percent.

Transport group imports also witnessed a decrease of 42.78 percent during the periodsubsequent to 27.70 percent decline in road motors vehicles (built units CKD/SKD), 45.56percent decrease in Completely Built Units (CBU), 13.77 percent decrease in import of busestrucks and heavy vehicles, and 55.51 percent in motor cars. However, import of motorcyclesincreased by 681.71 percent during the first quarter of the current fiscal year as compared tothe same period of last year.

Among other sectors, imports of petroleum group decreased by 0.62 percent, textile group1.45 percent agriculture and other chemical group by 2.64 percent. A marginal increase of2.77 percent was noted in import of textile machinery and 5.97 percent mobile phone whileimport of power generation machinery declined by 29.17 percent and agricultural machineryand implements by 64.32 percent during the period under review.




Global livestock nutrition conference beginsat UVASOctober 24, 2013

Planning And Development (P&D) Board Chairman Irfan Elahi has said the government istaking initiatives to boost national economy through strengthening existing livestock's healthand productivity, milk and meat processing and marketing. He was addressing the fourth"International Livestock Nutrition Conference" which began at the University of Veterinaryand Animal Sciences, Lahore on Wednesday.

Elahi formally inaugurated the conference which has been arranged by the UVAS incollaboration with the Nutritionists Association of Pakistan. President NutritionistsAssociation of Pakistan, Dr Mussaddiq Asif and Chairman Nestle Pakistan, Syed Yawar Aliwere also present.

Secretary Livestock, Dr Sajid Yousfani hoped that the conference will make fruitfulrecommendations for the solution of field problems. Dr Mussaddiq and Syed Yawar Ali alsospoke on the occasion. Later in three technical sessions, local and foreign experts spoke aboutvarious aspects of nutrition for efficient livestock productivity, dairy nutrition and feedresources and manufacturing technology. Presenting the welcome address, the VC said theconference comprises eight sessions including five technical sessions on dairy nutrition, feedresources and manufacturing technology, beef nutrition, buffalo nutrition and nutrition ofsmall ruminants.


IT and Computers: Pakistan

WeBOC improvement: Commission makeskey recommendationsOctober 24, 2013

One-man commission in its fact-finding report regarding 'smuggling of arms and ammunition'has recommended that a dedicated team of tax experts/software engineers may be deputed toensure that all the goods declarations processed by WeBOC have all the automatic dataexchange linkages with other computer systems of Federal Board of Revenue (FBR).

Sources told Business Recorder here on Wednesday that the former FBR Member Customs,Ramzan Bhatti has made valuable recommendations on improving the working of theWeBOC clearance system. Referring to the report, sources said that presently there arestandalone computer systems for each tax to be collected by the FBR. Customs duties andother taxes which form about 40 percent of total taxes are realised through processing goodsdeclarations under the "WeBOC Computer System" and One-Customs System," bothdeveloped by Pral. These two systems are neither dovetailed nor are the data mirrored on real



time basis. All the vessels information reports (VIR) are electronically received by theWeBOC which processes about 90 percent of the goods declarations. The rest of the goodsdeclarations are processed through the One-Customs. The commission has been informed thatthe WeBOC System has been audited by two different organisations but no audit reports weremade available. Neither any follow-up action of audit reports was communicated.

The commission has studied the WeBOC System in short span of time and is of the view thatRequirements Specification Document (RSD) needs to be reviewed by a team of tax expertswith a view to making it a comprehensive system based on EDIFACT (Electronic DataInterchange for Administration, Commerce and Trade). A dedicated team of tax experts andsoftware engineers may be deputed to ensure that all the goods declarations be processed byWeBOC with the facility of back and forth automatic linkages/exchange of data with theother computer software systems of the FBR. In the long run the FBR should have oneintegrated software system for all taxes with facility of real time exchange/tabulation of datawith respect to all activities of a tax registered person, sources said.

Quoting the report of the commission, sources were of the view that the Project Director(WeBOC) works in solitary environment. He has neither been declared as masters of theprograms nor assigned any password/user ID to oversee the development and actual workingof the software. He has even no qualified software auditor to help him in ascertaining theefficacy of the developed and operational software. Instead, the Pral is left to develop andmaintain the software. It is learnt that even Pral has no qualified software auditor to ensurethat the software developed is comprehensive and meets all the requirements of the users. It isof considered opinion that Pral has failed in developing integrated software for the FBR, asno technical team of tax experts assist the Pral in developing the software. There is no onlineaudit facility or management information system which generates alarms in cases of anymeddling with system by the unscrupulous persons/users. There are no backward and forwardlinkages or automated transfer of data from one system to another systems, ie, from One-Customs/WeBOC to Crest of Sales Tax and Mahasil and newly created provincial revenueauthorities. There is no evidence to find out that the computer software had ever pointed outthe evasion/leakages of revenues. The experience shared by the users was that each time Pralcome up with different information on the same subject whenever inquires are made, sourcesadded.




Fuel and Energy: Pakistan

KESC excluded: Discos'' September tariffsraised by 32 paisa per unitOctober 24, 2013

MUSHTAQ GHUMMAN

National Electric Power Regulatory Authority (Nepra) has increased electricity tariffs ofDistribution Companies (Discos) by 32 paisa per unit for September 2013 under the monthlyfuel adjustment formula. The authority approved the increase after a public hearing in aresponse petition filed by the Central Power Purchasing Agency (CPPA). The increase wouldbe applicable on all distribution companies except for Karachi Electric Supply Company(KESC).

The CPPA in its petition submitted to the regulator stated that hydel generation in Septemberstood at 4,141.74 GWh and its share in total generation was 44.16 percent, but failed tomention the cost of generation. Generation from coal stood at 6.21 GWh at Rs 3.6118 perunit, generation from High Speed Diesel (HSD) was 115.84 GWh at Rs 23.0164 per unit,Residual Fuel Oil (RFO) 3,128 GWh at Rs 15.5711 per unit, generation from gas 1407.82GWh at Rs 4.8362 per unit, nuclear 431 GWh at Rs 1.3228 per unit, import from Iran 38.80GWh at Rs 10.55 per unit, mixed 91.05 GWh at Rs 8.4517 per unit and wind power 35.07GWh. Generation cost of wind power has not been mentioned in the tariff petition. Powergenerated from all sources stood at 9,378.82 GWh at Rs 59.90679 billion at a rate of Rs6.3875 per unit. After including other charges, the CPPA has revised fuel charges at Rs6.5469 per unit.

On the basis of data, the CPPA has sought an increase of Rs 0.2976 kWh over the referencefuel charges, ie, Rs 6.2493/kWh. Nepra had invited all the interested/affected parties to raisewritten/oral objections as permissible under the law at the public hearing. Pursuant to section31(4) of the Nepra Act (XCL of 1997) and mechanism for monthly fuel adjustmentprescribed by the authority in the tariff determinations of Discos, Nepra is authorised toreview and revise the approved tariff on account of any variations in the fuel charges onmonthly basis. The Supreme Court of Pakistan has already sought the record of publichearings.




Senate panel seeks details of payments toIPPsOctober 24, 2013

MUSHTAQ GHUMMAN

A three-member panel of Senate headed by Maula Baksh Chandio, former PPP Minister, onWednesday sought details of "Rs 480 billion" paid to Independent Power Producers (IPPs)and the source of the funding along with interest after the Director General (Finance)National Transmission and Dispatch Company (NTDC) exposed the Water and PowerMinistry by stating that NTDC is not aware of the source of funding.

However, Director General NTDC, Rehan informed the parliamentary team that Rs 270billion was paid to 28 IPPs before June 30, 2013. The IPPs were established under 1994 and2002 power policies. The director general NTDC said the amount to clear circular debt hadbeen arranged by the Ministry of Finance and NTDC was not aware of either the source offunds or the interest that might accrue in the event that the funds were borrowed.

Senator Nisar Muhmmad and Senator Khalida Parveen raised a number of queries regardinggeneration statistics, condition of transmission lines in interior Sindh, delay in projectsfunded by the Asian Development Bank and World Bank. The panel also sought agreementssigned with the IPPs under Power Policy 1994 and Power Policy 2002 so that theparliamentary body could inquire about incentives given to the private sector powercompanies. The panel also directed the Ministry of Water and Power to provide a month-wisethree-year record of generation statistics of IPPs.

Senator Nisar Muhammad argued that power generation was better in June 2013 prior to thepayment to the IPPs, adding the generation increased in July but then again declined slightlyin the months of August and September. The NTDC officials explained that the generationfrom IPPs and Gencos increased after payment was made to reduce inter-circular debt.However, the generation from IPPs has declined as plants are shut for annual maintenance, ona staggered basis, which will be completed by December 15, 2103. Senator Maula BakshChandio queried why electricity was not available in Sindh even after the government hadpaid billions of rupees to IPPs in one go and spent massive amount on improvements in thesystem. He criticised the government for not providing electricity even during summermonths. "I am from Sindh and cannot take on the federation run by the Punjabis as electricitysupply is even worse in Punjab," Chandio maintained; and jokingly added that he now backedthe Supreme Court''s recent decisions relating to the power sector.

The panel also asked Additional Secretary Water and Power, Ijaz Ali Khan to provide latestfigures of inter-circular debt that had resurfaced after June 2013. Unofficially, Ministry ofWater and Power claims that circular debt has reached Rs 157 billion which also includes anunsettled amount of Rs 81 billion. One of the NTDC officials informed the committee thatdetermination of power tariff increase had not been implemented so far because the case wasstill being heard by the Supreme Court. He maintained that the circular debt could not becontrolled or eliminated until difference between cost of generation and sale price wasminimised.

The panel also criticised Chief Executive Officer of Hyderabad Electric Supply Company for



not attending the meeting of Senate''s penal. Convenor of the panel, Senator Maula BakshChandio dubbed the CEO Hesco as a "Viceroy" and directed the company''s officials toensure his presence in the next meeting. The panel expressed displeasure over theperformance of Hesco and Sesco with regarding to system improvement.


Power sector: PSO receivables reach Rs 98billion markOctober 24, 2013

Pakistan State Oil (PSO) has told the Ministry of Petroleum and Natural Resources that someof the power companies have once again started delaying the dues payment with the resultPSO''s receivables against power sector have reached Rs 98 billion. This was revealed by asenior official of PSO while briefing Abid Saeed, Secretary Petroleum Ministry, hereWednesday.

The Water and Power Development Authority (Wapda) is also not paying 25 percent of itsdaily collections on account of electricity bills to PSO, which is one of the main causesbehind worsening liquidity position of national fuel supplying company, the official added.

Wapda has agreed with PSO to pay 25 percent of its daily bill collections, but has stoppedpaying the dues which is essential for maintaining a regular fuel supply to power houses. ThePSO management has also written a letter to the Ministry of Finance in this regard, whichstates: "After clearing circular debt by the current government PSO financial matters havestarted worsening again due to delayed payments by Hub Power Company (Hubco) whichhas to clear Rs 20 billion on account of outstanding dues."

Sources said PSO has to pay Rs 20 billion to international fuel suppliers on an urgent basisand another tranche of Rs 30 billion is due in the first week of November, if the power sectorfails to release PSO dues, the company will be facing serious challenges within the next fewweeks. PSO has also warned Hubco if it failed in making timely payments, the national fuelcompany will be forced to reduce or stop furnace oil/diesel supply to Hubco.

Sources in the Petroleum Ministry stated, "Hubco has started creating problems for PSO bydelaying payments. We have raised the issue with our parent ministry, ie, Petroleum Ministryas well as with Finance Ministry and on October 26 the issue will also be taken up in themeeting of Senate Standing Committee on Petroleum and Natural Resources."




Solar energy plants in Pakistan: Shahbazarrives in China to explore possibilitiesOctober 24, 2013

Chief Minister of Punjab Mian Shahbaz Sharif arrived here on Wednesday on a two-day visitto explore possibilities of setting up solar energy plants in Pakistan. On arrival, ShahbazSharif was warmly greeted by the high officials of the Foreign Affairs Office of XinjiangAutonomous Region, Ambassador Masood Khalid and a large number of traders andentrepreneurs.

Soon after arrival, the Chief Minister met with Li Jian Hua, the Chief Executive Officer ofTBEA Group and later left for inspecting solar energy power plants in Xinjiang and itsadjoining areas. The Chief Minister Punjab said that addressing the energy crisis is one of thetop priorities of the present government and in this respect he had a lot of expectations fromthis visit.

He appreciated China's keen interest and co-operation in addressing energy crisis andinfrastructure development of the country. He pointed out that Pakistan Muslim League (N)government led by Mian Nawaz Sharif was committed to addressing energy shortfall thusreturning brightness in the country.

He said that meeting the energy shortfall will regalvanize economic activity, unleash an eraof economic prosperity and brighten the country's future. Mian Shahbaz Sharif said that whenour factories and mills will start getting power supply, they will function with full capacity,thus provide job opportunities to the common man. The Chief Minister appreciated the warmwelcome accorded to him on his arrival and said it illustrated the warmth both sides have inour relationship. Later on, Vice Governor Xinjiang province, Mai He Su Ti Kurexi hosted abanquet in honour of the Chief Minister and his entourage.


Speakers urge government to renegotiategas price with IranOctober 24, 2013

ABDUL RASHEED AZAD

Speakers at a seminar have urged the government to renegotiate gas price with Iran underIran-Pakistan (IP) gas pipeline project, saying that as per current agreement Iranian gas willcost Pakistan $15mmBtu which is on the higher side, as Iran, according to them, is alreadysupplying gas to Turkmenistan at the rate of $4/mmBtu.

They suggested to the government that with around 105 trillion Cubic Feet (TCF) localreserves of Shale Gas that can be effectively exploited to meet the country's energy demand,Pakistan should follow the global shale gas initiative. They said that by modernising the



existing thermal power plants the efficiency and production of power generation units willincrease considerably; as a result, Pakistan's reliance on foreign resources will decreaseconsiderably.

The event was arranged by Sustainable Development Policy Institute (SDPI) to launch itslatest research report with a focus to bring the Iran-Pakistan Pipeline under the spotlight, andaims to create a dialogue for re-evaluating Pakistan's Energy Equation. The report is anindependent project of SDPI's energy team, in light of existing data.

SDPI report analysed Pakistan's natural gas sector, performance of gas-fired thermal powerplants and the Iran-Pakistan pipeline project, and gave specific recommendations based onthe report's salient findings. One of its key research elements was a calculation of the realcost of electricity generation after injection of Iranian Gas, at the rate of the prevailing GasSale Purchase Agreement (GSPA).

Presenting his report, Engineer Arshad Abbasi, Energy Advisor, SDPI, said that as gas andoil prices have become an outdated phenomenon all over the world with the expansion ofshale gas; Pakistan needs to re-negotiate the gas price it intends to buy from Iran. He gave theexample of Italy and Germany that took their cases to the International Court of Arbitrationfor delinking of the oil and gas pricing regarding their gas deals. He said that there was nopoint for cancellation of the Iran-Pakistan gas pipeline agreement but renegotiations of thegas prices under the prevalent situation under the clause 6.3.2 provided in the agreement.

He maintained that Pakistan has a combined power generation capacity of 24,000MW whichit was unable to meet due to scarcity of natural gas supply to its power generation units. As ofnow, Pakistan has failed to discover new gas reserves, hence it is required to imports naturalgas to meet its growing energy requirements. Moreover, natural gas as a resource is of theutmost importance for Pakistan as it makes up for almost 50 percent of the country's energymix.

While chairing the session, Engr Shamsul Mulk, former Chairman WAPDA/Former ChiefMinister KPK drew attention towards consistent policy failures in the energy sector, whichhad led to the present high costs of electricity. He also asserted that as the cost of electricitygeneration from oil or coal sources is much higher, natural gas is crucial for Pakistan's energysector. In this scenario, Pakistan needs to import gas but the importance of mutual benefitsregarding the IP project cannot be ignored and Pakistan should not compromise on pricingissues. He stressed the need for building more dams and water reservoirs. Quoting theexample, Shamsul Mulk said Egypt managed to survive 7 years long drought with the help ofproper water storage system.

Dr Abid Qaiyum Suleri, Executive Director, SDPI while highlighting the SDPI's report on IPproject said that it presents an objective analysis of Pakistan's energy scenario while takinginto consideration the financial and economic ramifications of the project. He alsoemphasised the significance of this report and the IP project in the context of US-Pakistanrelation as it is believed that Pakistan's Prime Minister will have discussion about thecountry's energy crisis with his US counterpart in Washington.

Former Ambassador Shafqat Kakakhel, Chairman Board of Governors SDPI said that thereport has been launched with the aim to contribute to the ongoing national dialogue overenergy security of Pakistan. There is a dire need of improving transmission and distributionsystem, developing clean sources of energy, controlling indiscriminate spread of gasconnection and maintaining smart meters, he maintained.




Purchase of transformers: over Rs ninebillion loss caused to national exchequerOctober 24, 2013

IQBAL MIRZA

A staggering loss of over Rs nine billion has been caused to the national exchequer on thepurchase, till date, of 1,200 transformers at Rs 7,600,000 each as a result of NationalTransmission and Distribution Company's (NTDC's) collusion in the deal. Advisor,Transparency International Pakistan, Syed Adil Gilani in a letter sent on October 22 toKhawaja Muhammad Asif, Federal Minister for Water and Power has invited his attention tothe collusion by NTDC for favouring purchase of tap charger, a component of transformer,only from M/s M R Germany.

Referring to TI-Pakistan's letter of September 19 which was based on a report published inBusiness Recorder, said that the detailed clarification received from M/s 7AAYS, reveals adifferent story, in which it appears that NTDC in fact has been involved in cartelization withM R Germany, and guilty of anti-competitive practice, causing loss of approximately loss ofover Rs nine billion to exchequer by favouring tap charger only from M/s M R Germany.

The Competition Commission of Pakistan's (CCP's) inquiry report of February 28, on thesubject, is a proof enough for the minister to take action on corrupt practices, againstsuppliers as well as against officers involved. In addition to this, the complainant stated thatall the On Line Tap Chargers (OLTCs) in the world are manufactured according toInternational Standard IEC60214-1 2003 and NTDC followed the same specifications forOLTC to be manufactured. However, all NTDC specifications clearly refer to IEC60214-12003, but in the tender documents of distribution companies (Discos) under section IV oftechnical specification, they put a clause using brand name M/s M R-Germany to favour thisparticular brand which is against the Public Procurement Regulatory Authority (PPRA)Rules. "The power transformer must be equipped with vacuum type On-Load Tap ChangerM/s M R-Germany or equivalent specification," according to NTDC's letter of March 22,2011.

During the award of tenders, subsequent events point out the abuse of dominant position ofNTDC and Discos by ignoring discount of bidders, extended advertisement dates, delay inexecution of tenders, rejecting OLTCs manufactured by anyone other than M/s M R-Germany and exclusion of bidders for no reasonable basis.

The complainant also submitted that NTDC is involved in agreement(s) prohibited undersection 4 of the Act 4 with Discos, M/s M R-Germany and M/s ACA relating to collusivetendering or procurement of transformers. Most of the time, the procurement of transformerswere completed at exorbitant prices. The fact that NTDC procured these transformers withouteven floating a tender is clear evidence of collusion between M/s M R- Germany, agentsACA and NTDC.

Adil Gilani pointed out that NTDC through its letter of March 22, 2011 had instructed all theDiscos to incorporate the following requirement in the bidding documents, while tendering



for purchase of power transformers. "The power transformer must be equipped with vacuumType On-Load Tap Changer M/s M R-Germany or equivalent specification". He reiteratedthat NTDC through its design department works in the capacity of a consultant for variousDiscos for preparation of bidding documents, lying down of specifications and finallyevaluation of bids. Being the consultant, it is not mandatory for the Discos to follow suchdirection of NTDC; however, Fesco, Mepco and Lesco have followed the instructions ofNTDC in procurement of transformers. Such practice indicates that Fesco, Mepco , Lesco andNTDC (through its design department) have prima facie entered into an arrangement forimposing a restrictive trading condition in the market for supply of transformers to NTDCand Discos, prima facie, in violation of Section 4(2)(a) of the Act.

The procurement made by the public sector organisations is the single largest segment of theeconomy affected by collusive bidding and other such anti-competitive behaviour, causedhuge losses to government exchequer. For example it has been noted that in a recent IESCOtender for supply of a single unit of 132KV transformer, the difference between the quotedprices of transformer equipped with M/s M R-Germany OLTC and with a Chinese madeOLTC amounted to Rs 7, 600,000/- indicating the level of expenditure involved in suchprocurements, he said.

It would, therefore, be appropriate and in the public interest for the Commission to initiateproceedings under section 30 of the Act against NTDC, Fesco, Mepco and Lesco for primafacie violation of section 3 and section 4 of the Act, Adil Gilani said. TI-Pakistan requestedthe minister to examine the complaint of M/s 7AAYS, and the inquiry report of CCP ofFebruary 28 for action to be taken against the violators of law. Unless the Ministry of Waterand Power exercise its mandate to conduct across the board accountability of cartel makers,who are acting in connivance with public office holders, the electricity shortage in Pakistanwill continue, as these elements will continue to create hurdles in project implementation dueto their vested interests.




Fuel and Energy: World

Oil down as US inventories rise, spreadtrade volatileOctober 24, 2013

Oil prices fell on Wednesday in volatile spread trading following a surge in US crude oilinventories to the highest level since June. US crude led the complex lower for much of theday, briefly pushing the contract's discount to international benchmark Brent crude out tomore than $13 a barrel, the widest since April, before pulling back to $11 ahead of thesettlement.

-- Brent/US crude spread widens to more than $13

-- US crude falls to lowest since July 1

-- China's crude stocks also rise in September

Late in the day, losses on Brent deepened and the spread narrowed to settle at $10.94 asmarket watchers said the earlier move was overdone. "People hadn't realised that thedifferential is too big," said Michael Lynch, oil analyst and president of consultancy StrategicEnergy & Economic Research Inc in Winchester, Massachusetts.

"With the spread widening so much, I think you're now seeing people going in and shortingBrent." Markets have been focused on a steep run up in US crude oil supplies as refiners putplants into seasonal maintenance, forcing domestic production to back up into stockpiles.Total US crude oil stockpiles have risen by 24 million barrels since mid-September,according to data from the US Energy Information Administration, as some 1.3 millionbarrels per day (bpd) of refining capacity has been taken offline.

"You've seen a refinery rate drop of more than 6 percent, which suggests when we don't runour refineries all out we have to put oil back in storage," said Gene McGillian, an analystwith Tradition Energy in Stamford, Connecticut. US crude for December delivery settled$1.44 per barrel lower at $96.86, its lowest settlement since July 1, after paring some lossesfrom an earlier drop to $96.16. Brent crude lost $2.17 per barrel, ending the day at $107.80per barrel, its lowest settlement price since August 8. Brent oil fell below both the 100-and-200 day moving averages for the first time since October 2.

Stockpiles at the Cushing, Oklahoma, delivery point for the US contract have showed buildsover the past two weeks, according to EIA data, snapping 14 straight weeks of drawdownsthat had helped support US oil futures and tighten the discount to Brent crude. "People werenot expecting Cushing builds in the last two weeks," said Tariq Zahir, managing member ofcommodity fund Tyche Capital Advisors in Laurel Hollow, New York.

Stockpiles also built in China, the second-largest oil consumer, in September, official newsagency Xinhua said on Wednesday, as crude imports jumped to a record high. Uncertaintyover the future of Scotland's Grangemouth refinery lent some early support to Brent. The



refinery provides steam to a plant that processes Forties, the largest crude oil streamunderpinning Brent futures. The owner of Grangemouth has shut its petrochemical plant andthreatened to close the adjoining refinery.




Markets

LSE gains 15.95 pointsWednesday, 23 October 2013 20:30

Posted by Imaduddin

LAHORE: Lahore Stock Exchange on Wednesday witnessed bullish trend by gaining 15.95 points as

the LSE-25 Index opened with 4422.69 and closed at 4438.64 points.

The market's overall situation, however, did not correspond to an upward trend as it remained at

2.454 million shares to close against previous turnover of 2.509 million shares, showing a downward

slide of 55,300 shares. While, out of the total 84 active scrips, 18 moved up, 53 remained equal with

13 shed values.

Oil and Gas Development Company Limited, Muslim Commercial Bank Limited and Mari Petroleum

Company were major gainers of the day by recording increase in their per share value by Rs 6.90, Rs

3.50 and Rs 3.06 respectively.

Lafarge Pakistan Cement, Pak Elektron Limited and National Bank of Pakistan lost their per share

value by Re 0.92, Re 0.40 and Re 0.40 respectively.

The Volume Leader of the day included The Bank of Punjab Limited with 535,500 shares, Faysal Bank

Limited with 447,000 shares and Lafarge Pakistan Cement with 418,000 share.




BR Research: All

Slow down the privatisation bandwagonOctober 24, 2013

BR Research

The government’s expectations regarding the intended privatisation of dozens of state ownedenterprises (SOEs) are optimistic beyond practicality. Since 1991 cumulative privatisationproceeds amount to Rs476 billion while PM Sharif and his team are eyeing the sale of assetsworth Rs1,500 billion in no time.

Pakistan Railways is not among the 31 companies which the government intends to privatise.The argument put forth by Railways Minister Khwaja Saad Rafique is that the blanket sale ofassets worth hundreds of billions of rupees is simply impossible. But this argument can alsobe extended to many other SOEs.

At the same time, the private sector can bring efficiency to the operations of many of theseenterprises while providing the government with resources to plug the gaping fiscal deficit.The process should by no means be abandoned; the argument is that the process must begiven its due time and consideration.

The privatisation plans for each of the entities must be uniquely tailored to derive the bestpossible outcome in each individual case. Consider the example of Railways; auction of railroute licenses could shuttle in private operators, domestic and international, with a capabilityof generating profits from these routes.

Similarly, a split strategy is optimal for PIA. Globally, the airline business is high-debt, low-return so it needs strong financial backing on the part of its owners. Sir Richard Branson, theowner of Virgin Airlines once famously quipped that the fastest way for a billionaire tobecome a millionaire is to own an airline.

An earlier proposal to split this company into good and bad companies needs to be explored.The good part shall have the planes, routes, economically serviceable debt to be managed bynew management hired on the basis of merit and experience. The bad part may have non-coreassets, economically unserviceable portions of debt and inefficient staff who are to beeventually given a golden handshake.

At current value, 26 percent shares of PIA would be priced around $70-80 million. That tallyis peanuts for those in the airline business and it’s not going to make a mentionable dent tothe fiscal deficit either. Hence a viable option in its case would be to split up the business interms of airline and non-airline operations and then find a messiah to strengthen the wings ofthe national carrier.

Similarly, Pakistan Steel Mills will also not fetch a good price as a package deal. In theenergy sector, the discos that are already performing well are the only ones that can get asound response from buyers.

But, if getting cash for the government is the only objective, just the sale of ten percent shares



from government’s holdings in OGDC can fetch a billion dollars. But this mouth wateringdeal will strip the government of a handsome stream of periodic dividends. The 2007 GDR ofthis company fetched a one-time tally of $738 million. The dividends foregone due to theGDR of 10 percent stake to date already tally 38 percent of the proceeds pocketed through theoffering.

The state-owned enterprises on the list are indulged in various businesses. Some of them canbe eye candy for investors; many others would sell dime on the dollar. The economicmanagers must iron out their priorities in terms of their requirements for generating fundsthrough privatisation on the one hand, and introducing efficiency in operations on the other.

The government has a significant shareholding in banks such as National Bank of Pakistan,United Bank Limited and Allied Bank Limited. Then there are other non-banking financialinstitutions like State Life Insurance, National Investment Trust and Pakistan Reinsurance.All of these can potentially generate relatively high amounts of proceeds for the government.The key issue is timing.

Though the stock markets have held up, foreign investments to the country have dwindled inrecent years. Finding the right buyers to strike deals at reasonable prices will require time,even for the financial institutions that are relatively lucrative and profitable. Setting shorttimelines will not serve the Finance Minister’s team or national interest.

Expenses take a toll on Samba’s profitsOctober 24, 2013

BR Research

Samba Bank Limited (SBL) is witnessing a phenomenal shift in its asset composition thisyear. Advances, which formed the major chunk of SBL’s asset pie until 2012, are losing itsshare to investments.

As of June 2013, Investment-to-Deposit Ratio (IDR) stood at 104 percent while Advance-to-Deposit Ratio (ADR) stood at 71 percent as against 39 percent and 68 percent, respectively,in December 2012. A closer look reveals that growth in investments came on the back ofmarket treasury bills given as collateral by the bank.

While the bank’s deposit growth was muted during the period, it massively borrowed T-billsunder repo agreements and gave them as collateral to the lending institutions. The movemight be to adjust some of balance sheet items.

During 9M CY13, SBL’s net interest margin (NIM) dropped down by 3 percent year on yearwith spread ratio clocking in at 42 percent as against 45 percent during the similar period oflast year. Perhaps heavy reliance on borrowings took its toll on NIM.

Cautious lending of late coupled with efficient provisioning in the yesteryears might haveenabled SBL to undertake reversals against loans and advances recently. However, thereversals shrank massively in the quarter ending September.

While the detailed financial accounts are not available yet to see the recent position of NonPerforming Loans (NPLs), they had ticked downwards as of June 2013. Perhaps, the bank is



well recovering its bad loans and hence annulling the provision booked earlier.

All the sources of non-mark-up income boasted growth during 9M CY13 except that the bankbooked loss on the sale of securities. Non-mark-up expense has also been swelled by 10percent year on year during 9M CY13.

The growth in expenses (mark-up and non-mark-up) overshadowed the growth in income(mark-up and non-mark-up) during 9M CY13, leading to 83 percent drop in net profits.

Low-cost deposit mobilisation appears to be the key to success for SBL. While the expectedrate hikes will further improve SBL’s top line, which remained quite afloat amid rate cuts, theensuing increases in minimum deposit rates might wreak havoc on its spreads, which havebeen already decreasing since 1Q CY13.

======================================================================SAMBA BANK LIMITED======================================================================Rs (mn) 9MCY13 9MCY12 chg======================================================================Markup Earned 2356 2314 2%Markup Expenses 1357 1287 5%Net Markup Income 999 1028 -3%Provisioning/(Reversal) -47 -61 -23%Net Markup Income after provisions 1046 1089 -4%Non Mark-up / Interest Income 126 104 21%Operating Revenues 1172 1192 -2%Non Mark-up / Interest Expenses 1135 1032 10%Profit Before Taxation 37 161 -76.9%Taxation -5 -84 -94%Profit After Taxation 42 244 -83%EPS (Rs.) 0.03 0.17 -82%----------------------------------------------------------------------Source: Company Accounts======================================================================

Attock Cement stands firmOctober 24, 2013

BR Research

A good mix of improved retention prices and volumetric sales especially on the export frontenabled Attock Cement (ACPL) to report a sizeable jump in earnings for 1Q FY14.Although, the overall industry sales stayed relatively flat during the quarter, ACPL managedto record impressive growth in export sales, which according to market sources, haveincreased by nearly 50 percent year on year.

The company benefited from increase in local retail prices which more than offset the impactof a slowdown in export market prices. Improved gross margins are a result of significantreduction in international coal prices and the efficiency initiatives taken by the companyincluding the adoption of alternate fuel which saved ACPL a sizeable cost.



The distribution costs have skewed northwards as a percentage of sales from 6.2 percentcompared to the same period of last year, to 7.8 percent during the quarter. Higher share ofexports in the sales mix likely explains the jump in distribution costs.

Local demand is expected to be strong and prices firm, which should bode well for theindustry in the near future. International coal has shed many a pound of late and the outlookis bearish as well, which should do well for ACPL’s margins.

======================================================================ATTOCK CEMENT PAKISTAN LIMITED======================================================================Rs (mn) 1QFY14 1QFY14 chg======================================================================Sales 2922 2546 15%Cost of sales 2067 1879 10%Gross profit 855 667 28%Gross margin 29.2% 26.2%Distribution cost 228 158 45%Operating profit 564 493 14%PAT 423 358 18%EPS (Rs) 3.69 3.12----------------------------------------------------------------------Source: KSE notice======================================================================

Faysal Bank turns the odds in its favourOctober 24, 2013

BR Research

While interest rate cuts had been quite worrisome for most of the banking sector players untiloff late, Faysal Bank was smart enough to avert its negative impact by its superior low-costdeposit mobilization.

By focusing on CASA (low-cost deposits) improvement, FABL not only prevented thetrickle-down effect of its weak top line onto its bottom line, but also improved its spread ratioin the due course. During 9M CY13, FABL’s spread ratio touched 37 percent, a level neverseen since 2008, as against the spread ratio of 30 percent during the same period of last year.

As FABL is banking on private sector advances, against the industry-wide trend of seekingrefuge in government securities, growth in Non-Performing Loans (NPLs) and theconsequent tall provisioning expense is an inescapable exercise. Hence, FABL’s provisioningexpense mushroomed by 88 percent year on year during 9M CY13.

The last quarter results showed that while NPLs had eased, higher provisioning was a resultof booking phased provision against the loans advanced to Agritech Limited and AzgardNine Limited, in accordance with the relaxation provided by the central bank. The similarpractice is expected to have continued this quarter too.



Another unfavorable event was a massive drop in the non-mark-up income, which primarilycame on the heels of lesser gains on the sale of securities.

Just like FABL controlled its mark-up expenses, it also managed to plunk down its non-mark-up expenses against the inflationary pressures. Then a massive reversal in deferred taxationand taxation (prior years) also pushed down the overall taxation charge.

All in all, the combination of lower expenses and lower taxation was enough to undo theharmful effect of weak income on the bottom line. Going forward, with FABL having ahealthy proportion of high-yielding advances in its asset portfolio, impending rate hikes willgreatly propel its top line growth. And perhaps, that is why Faysal’s stock jumped 3 percentby yesterday’s close to Rs11.38-–its one-month high-–in a market that was up by 0.53percent.

However, with saving deposits forming around 33 percent of its total deposits as of June2013, what FABL needs to be worried about are the hikes in minimum deposit ratesfollowing discount rate hikes. This could be detrimental to its net interest margins and blot itsbottom line amid falling non-mark-up income.

======================================================================FAYSAL BANK LIMITED======================================================================Rs (mn) 9MCY13 9MCY12 chg======================================================================Markup Earned 20,470 21,595 -5%Markup Expenses 12,832 15,043 -15%Net Markup Income 7,637 6,552 17%Provisioning/(Reversal) 1,413 753 88%Net Markup Income after provisions 6,225 5,799 7%Non Mark-up / Interest Income 3,596 4,195 -14%Operating Revenues 9,820 9,994 -2%Non Mark-up / Interest Expenses 8,101 8,276 -2%Profit Before Taxation 1,719 1,718 0.1%Taxation 415 589 -30%Profit After Taxation 1,305 1,129 16%EPS (Rs.) 1.41 1.22 16%----------------------------------------------------------------------Source: Company Accounts======================================================================

National Foods: inching closer to Vision2020October 24, 2013

BR Research

One thing that has kept NFOOD a cut above the rest within FMCG sector is the firm’s strongfocus on keeping a sharp check on operational costs. The firm’s management has always runa pretty tight ship and the proof is in the numbers as National Foods does what it knows best:



giving a rock solid performance even as the rest of the food sector is busy hitting a roughpatch.

The last few months have largely been characterised as a slow time for the FMCG sector;with demand for packaged food having remained lukewarm, despite the fact that the busiesttime of the year for food producers—i.e. Ramzan—happened to fall right in the middle of thequarter.

While domestic turnover for National Foods during the period was flat, a strong presence inthe markets with heavy South Asian Diaspora has been helping the firm’s export sales, whichhave strengthened during the period, going up by 9 percent year on year to hit Rs191 millionat the end of 1Q FY14.

Further help to the firm’s margins came in the form of containment in the cost of sales.Analysts report that at the back of National’s steady margins is an old school commitment tokeep a check on fixed costs, creative cash generating initiatives and a cautious approach toportfolio expansion.

During the last few quarters, National’s distribution and selling expenses has been the onlycategory that has shown a significant hike. And that too only because the company’smanagement made a conscious decision during the last quarter to rise spending on advertisingand promotion keep up with the rising wave of competition. Consequently, some ofNational’s more obscure product lines—such as the powdered drink segment—have pickedup pace and are doing better than ever.

Talking to BR Research, company representatives reported a strong volumetric growth in thefirm’s recipe mix and sauces category. Additionally, National Basmati Rice, which waslaunched in various key markets with new packaging, has also been successful in obtaining achunk of the branded basmati rice market and the firm expects a steady volumetric growth inthe rice segment during the coming quarters.

NFood’s steady performance moreover has not gone unnoticed at the country’s top bourses.Having crossed the Rs1 billion revenue threshold at the close of the previous quarter,National’s stock has gained considerable traction as its stellar growth garners investorattention. Sateesh Balani from Elixir Securities reports that return on the firm’s stock is at ahealthy 94 percent and has outpaced returns on both Nestle and RMPL at the close of the 3QFY13. Going forward, the overseas market still remains the biggest white space for the firmand the upcoming quarters will see the firm expanding its reach into the American andEuropean markets in a bid to get closer to its ambitious Vision 2020, which foresees the firmcrossing the threshold of Rs50 billion in revenues by the close of this decade.

======================================================================NATIONAL FOODS LIMITED======================================================================Rs (mn) 1QFY14 1QFY13 chg======================================================================Sales 2,475 2,349 5%Cost of sales 1,540 1,519 1%Gross profit 935 829 13%Gross profit margin 37.78% 35.29% 2.49 pptDistribution & selling expense 506 402 26%Administrative expenses 80 70 14%



Other operating expenses 22 29 -24%Finance cost 24 18 33%NPAT 217 200 9%EPS (Rs) 5.25 4.82----------------------------------------------------------------------Source: KSE notice======================================================================

Lafarge weighed down by third quarterOctober 24, 2013

BR Research

It pays to be efficient. And hopefully Lafarge Cement’s management has learnt that bygetting their fingers burnt by the onslaught of power tariffs and coal transportation costs inthe quarter ending September 2013.

Lafarge had had a good year until June 2013, when helped by better margins and lowerfinance costs, the firm had almost doubled its net profits over the half year ending June 2013.But, with rising input costs, the firm’s performance tanked in the third quarter endingSeptember.

Sohaib bin Shahid, equities analyst at Elixir Securities, says that the just ended quarter hasseen the whole cement sector being affected by 40-50 percent hike in power tariffs and anincrease in coal transportations due to higher taxes imposed in the fiscal budget FY14. But“because Lafarge’s plant is inefficient and consumes higher quantities of power and coal,rising input costs have had a more pronounced impact on the firm’s gross margins”, he said.

Gross margins that stood at 35 percent in June 2013, versus 31 percent in June 2012, wereshaved back to 31 percent by September, no thanks to 600 basis points year-on-year drop inthe third quarter.

Then there was a mild hit from higher distribution and administration costs that rose to standat 11 percent of sales in 1Q CY13 from 8 percent in the year-ago period.

The major blow towards the bottom line, however, came from the inexplicable bloating offinance costs in the third quarter. Industry watchers say they are unsure of the reasons behindsuch an increase in finance costs because the company did not have any capex plans as such.As of June 2013, the company had substantially reduced its long-term financing along with areduction in short-term borrowings.

It may well be that the rise in finance costs is due to exchange losses emanating from rupeedepreciation. But, perhaps matters like these will be clearer when the firm-–just like othercement firms—publishes its ‘detailed’ accounts, or holds an analyst briefing to discussdevelopments or at least otherwise talks to analysts reaching out for clarification (Hint!Hint!)!

======================================================================LAFARGE CEMENT======================================================================



Rs (mn) 9MCY13 YoY Chg 3QCY13 chg======================================================================Sales 7,866 12% 2,798 26%Cost of sales 5,405 12% 2,111 37%Gross profit 2,460 14% 686 1%Gross margin 31% Up 25% Down40 bps 600 bpsDistribution costs 222 38% 76 69%Admin expenses 660 59% 230 69%Other operating income 27 286% -16 -715%Finance costs 547 -34% 290 32%Other charges 74 n.a 4.8 n.aNet profit 984 28% 38.6 -86%EPS (Rs/share) 0.69 19% 0.03 -85%----------------------------------------------------------------------Source: KSE notice============================================================================================================================================PAKISTAN TOBACCO COMPANY LIMITED======================================================================Rs (mn) 9M-FY13 9M-FY12 Chg======================================================================Turnover - net 22750 19099 19%Cost of sales 14876 13069 14%Gross profit 7874 6029 31%Other operating income 119 51 132%Operating profit 3947 1802 119%Profit before tax 4035 1770 128%Profit after tax 2702 1153 134%EPS (Rs) - basic 10.57 4.51----------------------------------------------------------------------Source: KSE notice============================================================================================================================================HIGHNOON LABORATORIES LIMITED======================================================================Rs (mn) 9M-FY13 9M-FY12 Chg======================================================================Sale - net 2201 1857 19%Cost of sales 1332 112 1093%Gross profit 868 747 16.2%Other operating income 12 15 -16%Operating profit 193 137 41%Profit before tax 173 99 75%Profit after tax 113 65 73%EPS (Rs) - basic 6.28 3.60----------------------------------------------------------------------Source: KSE notice============================================================================================================================================BATA PAKISTAN LIMITED======================================================================Rs (mn) 9M-FY13 9M-FY12 Chg======================================================================



Sales - net 9382 8481 11%Cost of sales 6721 5180 30%Gross profit 3661 3301 11%Operating profit 1250 1143 9%Other income 65 37 75%Profit before tax 1273 1140 12%Profit after tax 936 846 11%EPS (Rs) - basic 123.80 111.92----------------------------------------------------------------------Source: KSE notice============================================================================================================================================HUM NETWORK LIMITED======================================================================Rs (mn) 1Q-FY13 1Q-FY12 Chg======================================================================Revenue - net 634 523 21%Cost of production & Transmission 319 315 1%Gross profit 315 209 51%Other operatng income 20 18 14%Profit before tax 202 124 63%Profit after tax 138 75 84%EPS (Rs) - basic 1.97 1.07----------------------------------------------------------------------Source: KSE notice============================================================================================================================================ENGRO POLYMER & CHEMICALS LIMITED======================================================================Rs (mn) 9MFY13 9MFY12 chg======================================================================Sales - net 17,948 15,414 16%Cost of sales (14,511) (12,847) 13%Gross profit 3,437 2,567 34%Other operating income 245 422 -42%Operating profit 1,933 1,301 49%Profit before tax 791 83 850%Profit after tax 562 57 893%EPS (Rs) - basic 0.85 0.09 844.44%----------------------------------------------------------------------Source: KSE notice============================================================================================================================================OSTUKA PAKISTAN LIMITED======================================================================Rs (mn) 1QFY13 1QFY12 chg======================================================================Sales - net 317 378 -16%Cost of sales (286) (273) 4%Gross profit 31 105 -70%Other income 7 37 -82%Operating profit (29) 1,301 -102%Profit before tax (39) 24 -259%



Profit after tax (41) 16 -352%EPS (Rs) - basic (4.12) 1.63 -352.76%----------------------------------------------------------------------Source: KSE notice============================================================================================================================================GHANI GLASS LIMITED======================================================================Rs (mn) 1QFY13 1QFY12 chg======================================================================Sales - net 2,183 2,329 -6%Cost of sales (1,688) (1,653) 2%Gross profit 495 677 -27%Other operating income 13 4 215%Operating profit 246 469 -47%Profit before tax 173 410 -58%Profit after tax 130 306 -58%EPS (Rs) - basic 1.10 2.86 -61.54%----------------------------------------------------------------------Source: KSE notice============================================================================================================================================SITARA CHEMICALS INDUSTRIES LIMITED======================================================================Rs (mn) 1QFY13 1QFY12 chg======================================================================Sales - net 2,181 2,140 2%Cost of sales (1,559) 1,445 -208%Gross profit 622 695 -11%Other operating income 12 4 197%Operating profit 525 582 -10%Profit before tax 426 436 -2%Profit after tax 286 301 -5%EPS (Rs) - basic 13.35 14.04 -4.91%----------------------------------------------------------------------Source: KSE notice======================================================================



Brief Recordings

Attock Cement Pakistan LimitedOctober 24, 2013

Attock Cement Pakistan Limited (ACPL) was incorporated in 1981 in Hub Tehsil ofBalochistan province. The company initiated production in 1988 with an initial productioncapacity of 2,000 tons per day, which was enhanced further by 400 tons in 1994.

In 2002, the company acquired ISO certification 9001:2008, and was listed on the KarachiStock Exchange in the same year. In the following year, Attock installed an in-house coalfiring plant which was followed by a plant expansion (installation of second production line)in 2006.

In recent years, Attock Cement has advocated greater efficiency in cement production, withinstallation of Waste Heat Recovery Project for generation of 12MW power in 2010. Thecompany is also registered with United Nations Framework Convention on Climate Change(UNFCCC) for carbon reduction in production processes and installed an alternate fuelsystem in 2013.

ACPL specialises in the manufacturing of its Falcon brand cement. ACPL products includeordinary Portland cement, sulphate resistant cement, and Portland blast furnace slag cement.The Pakistani cement industry is divided into North and South zones.

Attock Cement is located in the South zone with manufacturing facilities in Hub Tehsil,Balochistan. Its operational capacity currently stands at 1.7 million tons per year, each forclinker and cement. Compared to the industry, Attock's installed capacity makes it a mid-sized operation in the country.

ATTOCK GROUP ACPL is part of Attock Group of Companies, Pakistan's only verticallyintegrated oil conglomerate. Its associated companies include Attock Petroleum, PakistanOilfields, Attock Refinery and National Refinery. Attock Group also has interests in powergeneration and IT through Attock Generation Limited and Attock Information TechnologyServices.

The Attock Group is owned by Pharaon Investment Group Limited, Holding S.A.L BeirutLebanon. Other than oil exploration, production, refining & manufacturing of petroleumthrough Attock, Pharaon Holdings is also engaged in diversified entrepreneurial activitiesinternationally that include Hotels, Chemicals and Real Estate. Attock Cement is 84.06percent owned by Pharaon group.

INDUSTRY REVIEW FY13 FY13 was a year marked by turbulence for the Pakistanieconomy. GDP grew by 3 percent amid law and order and energy shortage crises. However,the performance of cement and construction sectors was satisfactory compared to theprevious years.

At present, total cement industry capacity in the country stands at 44.8 million tons. Duringthe year FY13, local demand grew by five percent, clocking in at 25 million tons. Another 8



million tons of cement production was met with foreign demand, meaning exports formed athird of local demand.

Over the years, the cement industry has become increasingly reliant on exports to maintaindecent utilisation rates. In the absence of investment in housing and construction by bothpublic and private sectors, the trend in reliance on exports is expected to continue.

According to industry experts, only high spending on infrastructure by the government canrevive the dampened local demand for cements. Though at the same time, the industry hasbeen able to make its marks in markets such as Afghanistan, Middle East, Africa and SriLanka. In the absence of any governmental subsidy, these exports are an encouraging sign butremain susceptible to external shocks.

In order to continue the recovery momentum, the cement industry would do well bycontrolling its high energy costs and investing in capital intensive, fuel efficient projects

PERFORMANCE BRIEF FY13 In FY13, Attock Cement managed to sustain growth andincrease its overall utilisation and profitability. Its capacity utilisation for clinker and cementstood at 104 and 103 percent, respectively. Total cement dispatches were flat at 1.8 milliontons during the year; however, its local market sales grew from 1.34 million tons in FY12 to1.36 million tons this year, a year-on-year growth of two percent.

Production in excess of local demand was exported to aforementioned regional markets,clocking in nearly 484 thousand tons. This was despite lower cement prices in theinternational market. However, as per the company director's report, "it has managed thesales mix in such a manner (so as to) achieve maximum sales revenue while maintainingcapacity utilisation of hundred percent.

ACPL's top line grew by 9.6 percent year on year, while cost of sales grew by only 3.7percent in comparison. This equalled a gross profit growth of nearly 26 percent, especiallygiven the high base effect from last year. In spite of rising electricity costs, the cost side waskept under control due to contribution from Waste Heat Recovery (WHRC) project, whichserved nearly 25 percent of company's electricity requirements during the year. Decline incoal prices from USD 106 per ton to 99 per ton also contributed towards lowering productioncost. However, this was partly offset by devaluation of Pak rupee against the dollar.

According to the company report, "a combination higher net retention and effective control ofproduction cost" resulted in the record Profit after tax for the company. The companymanaged to improve its gross profit margin by 390 basis points compared to the previousyear.

PROFITABILITY Other income grew by 55 percent during the year mainly on account ofgain on disposal of investment in mutual funds, sale of operating assets and gain on sale offurnace oil. Finance charges were kept under check and were not able to make a dent in Profitbefore tax, which grew by 32 percent. The company posted record Profit after tax of Rs 2,136million during this year, growing by nearly 49 percent year on year. Operating margins alsoimproved from 19 percent during FY12 to 23 percent in year ending June '13.

FUTURE OUTLOOK According to industry experts, the lull in local cement demand canonly be revived by high government infrastructure spending. Luckily, the incominggovernment announced PSDP spending of Rs 1.155 billion in federal budget of FY14, alongwith plans to construct 100 housing colonies over a period of next three years. However,



given the limited fiscal space available to the new government due to high fiscal deficit, itremains to be seen whether these projects will see the light of the day.

On export front, cheaper cement prices in regional countries are making several exportmarkets unattractive for the company; influx of Iranian cement in Iraq is a major case inpoint. Attock cement, as well as the industry in general, needs to explore other exportdestinations, if it is to continue its reliance on export or face another period of decline inutilisation levels.

=========================================================================ATTOCK CEMENT PAKISTAN LIMITED=========================================================================Rs (mn) FY13 FY12 FY11 FY10 FY09=========================================================================Financial PerformanceTurnover - net 11,508 10,504 8,554 7,668 8,510Cost of sales (7,973) (7,691) (6,823) (5,710) (5,801)Gross (loss) / profit 3,535 2,812 1,731 1,958 2,709Distribution Cost (578) (571) (513) (467) (437)Administrative expenses (263) (222) (186) (184) (182)Other expenses (230) (119) (77) (103) (147)Other income 227 146 104 262 167Profit from operations 2,691 2,047 1,059 1,466 2,108Finance cost (15) (12) (24) (78) (120)Profit before taxation 2,676 2,035 1,034 1,388 1,989Taxation (540) (598) (350) (372) (496)Profit/(Loss) after taxation 2,136 1,437 684 1,017 1,493Other comprehensive income - - - (13.062) 12Total comprehensive income 2,136 1,437 684 1,004 1,505Earning per share - basic 21.45 14.43 7.90 11.74 17.24Source: Company Accounts=================================================================================================================================================FY13 FY12FY11 FY10 FY09========================================================================Profitability------------------------------------------------------------------------Gross profit margin % 30.7% 26.8% 20.2% 25.5% 31.8%Operating profit margin % 23.4% 19.5% 12.4% 19.1% 24.8%Net profit margin % 18.6% 13.7% 8.0% 13.3% 17.5%ROCE % 33.9% 30.9% 18.3% 24.5% 36.1%Interest coverage times 180.7 176.5 43.6 18.9 17.6------------------------------------------------------------------------Return to Shareholders------------------------------------------------------------------------ROE % 27% 22% 12% 19% 31%EPS (basic) (Rs) 21.45 14.43 7.90 11.74 17.24Price earning ratio times 6.15 4.91 6.20 5.62 4.06------------------------------------------------------------------------Solvency & Liquidity------------------------------------------------------------------------Debt-to-Equity times - - - - 0.13Current ratio times 2.77 2.52 1.70 2.62 2.43



Quick ratio times 1.86 1.05 0.34 1.67 1.36------------------------------------------------------------------------Activity------------------------------------------------------------------------Total asset turnover times 1.17 1.26 1.16 1.09 1.22Fixed asset turnover times 1.92 1.94 1.60 1.82 2.05------------------------------------------------------------------------Source: Company Accounts========================================================================



Miscellaneous News

Dismal State: Pakistan’s current accountdeficit widens to $1.2bBy Kazim Alam / Creative: Munira Abbas

Published: October 24, 2013

KARACHI:

Pakistan’s current account deficit as opposed to a surplus of $439 million in thecorresponding three-month period of last year, widened to $1.2 billion in the firstquarter of fiscal 2014 (July-September), according to data released by the State Bank ofPakistan on Wednesday.

The data shows that the current account deficit in September alone was $608 million, up 7%compared to $569 million in August.

Talking to The Express Tribune, Standard Chartered Bank Senior Economist, Sayem Ali saidthat the cause of the widening current account deficit is increasing imports although aconsiderable pick-up was recorded in exports and remittances over the same period.

Compared to the corresponding period last year, Pakistan’s exports of goods amounted to$6.2 billion, up 1.3% in the first quarter of fiscal 2014. In contrast, Pakistan’s imports ofgoods increased 8.9% to $10.6 billion over the same period. “This is driven primarily byhigher oil prices and rising energy demand in peak summer months that led to an inflatedimport bill,” said Ali.

The year-on-year increase in workers’ remittances was 9.1%, which remained $3.9 billion inJuly-September. The International Monetary Fund (IMF) had projected the current accountdeficit for fiscal 2014 at $1.6 billion in its September report, but the first-quarter figureindicates that the current account deficit will be significantly higher, Ali noted.

Although the government sought IMF assistance to forestall a balance-of-payments crisis, awidening current account deficit and large debt repayments have led to a sharp drawdown ofthe State Bank’s foreign exchange reserves.

“Besides this sharp decline, markets are concerned about the growing risk of rising global oilprices and Pakistan’s large external debt repayments on the horizon,” Ali added, saying thatthe rupee is under pressure due to depleting foreign exchange reserves.

Even after the release of the first tranche of the IMF loan, the SBP’s foreign exchangereserves remain weak at $3.9 billion as on October 10. “This is barely enough to cover one



month of import payments,” he said, noting that it is the lowest level of reserves since the2008 balance-of-payments crisis.

As on October 23, the rupee has declined 11% to Rs106.4 a dollar year-to-date. Ali said thatthe delay in the release of the next IMF tranche due in December will have seriousimplications for the balance of payments and the overall rupee outlook.

Talking to The Express Tribune, Global Securities research analyst Umair Naseer said thereceipt of the Coalition Support Fund (CSF) of $322 million and loan disbursements underIMF’s EFF programme are expected to support the declining foreign exchange reserves ofPakistan.

“The United States has also promised further payments under CSF ($1.6 billion) in fiscal2014, which can bring stability on the external front,” he said, adding that the expectedinflows would remain key to external account stability, as Pakistan is scheduled to repay $2billion to the IMF in the last three quarters of fiscal 2014 (November 2013-June 2014).

Pakistan has repaid approximately $900 million during the first quarter of fiscal 2014 against$417 million in the same period last year.

Published in The Express Tribune, October 24th, 2013.

Fuel price adjustment: NEPRA increasespower tariff by 32 paisa per unitBy Zafar Bhutta


ISLAMABAD:

There is no relief in sight for power consumers as the National Electric PowerRegulatory Authority (Nepra) has increased ppower tariff by 32 paisa per unit onaccount of fuel price adjustment for September this year.

The tariff hike will be applicable to all consumer categories of power distribution companies,except for lifeline consumers using up to 50 units per month and consumers of KarachiElectric Supply Company (KESC).

Earlier this month, Nepra has already notified an average tariff increase of 30% for domesticelectricity consumers effective from October.

The latest tariff revision came during a public hearing conducted by Nepra at its headquarterson Wednesday and chaired by its Acting Chairman Khawaja Naeem.



In its petition, the Central Power Purchasing Agency (CPPA) said for September, Nepra hadfixed the reference fuel cost for power generation at Rs6.2493 per unit, though actual coststood at Rs6.57 per unit.

In the month, CPPA sold more than 9.14 billion electricity units to power distributioncompanies and fuel cost was calculated at Rs59.84 billion.

CPPA said during transmission of electricity more than 203 million units were lost,constituting 2.5% of the total supply for the month. In reply, Nepra officials expressedconcern over the transmission losses and called for taking measures to control them.

CPPA also pointed out that Guddu power plant had been damaged, prompting aninvestigation and responsibility would be fixed soon.

At the end of the hearing, Nepra allowed an increase of 32 paisa per unit in power tariff. Theregulator, however, clarified that the tariff revision would not be applicable to consumers ofKESC and those using up to 50 units per month.

In total power generation, the share of hydroelectric power was 44.16%, coal-basedelectricity 0.07%, high-speed diesel-based power 1.24%, power produced through residualfuel oil 33.35%, gas-fired power 15.01%, nuclear power 4.6%, power import from Iran0.41% and wind power 0.25%.

The cost of coal-based power was estimated at Rs3.6118 per kilowatt hour, diesel Rs23.01per kwh, fuel oil Rs15.57 per kwh, gas Rs4.83 per kwh, nuclear Rs1.322 per kwh, powerimport Rs10.55 per kwh and hydropower less than a rupee.


Corporate results: Pakistan Tobaccoearnings soar 134% in Jan-Sept periodBy Farooq Baloch


KARACHI:

Pakistan Tobacco Company (PTC), despite a slow third quarter growth, more thandoubled its profit and increased revenues by nearly a fifth for the nine-month periodthat ended on September 30, 2013, according to the company’s financial results releasedon Wednesday.

A subsidiary of British American Tobacco and the largest tobacco manufacturer in thecountry, PTC earned more than Rs10 million a day in profit during the first nine months of2013.

The company’s profit for the period increased 134% to Rs2.7 billion or Rs10.57 per sharecompared to Rs1.1 billion or Rs4.51 per share in the corresponding period of 2012.



The manufacturer of Benson & Hedges and John Player Gold Leaf – the company’s high-endmarket brands – reported Rs22.7 billion in revenues for the nine-month period, an increase of19% compared with Rs19 billion earned in the same period last year.

The tobacco giant has paid Rs1.4 billion income tax for the nine months, a 115% increasefrom Rs653 million it paid to the national exchequer in the corresponding period of 2012.This is in addition to the Rs34 billion it paid as excise duty during the period.

As opposed to the nine-month results, which were impressive, the company’s quarterlyperformance showed that it didn’t have a good third quarter this year.

PTC earned Rs610 million or Rs2.39 per share during the quarter ended September 30, 2013,a decline of 12% compared with Rs691 million or Rs2.71 per share in the correspondingperiod of 2012. Revenues for the quarter increased 11% to Rs6.5 billion compared with Rs5.8billion in the same quarter last year.

The tax levied on retail price of each packet of cigarettes ranges from 68.5% to 81%,indicating that the tobacco industry is taxed at the highest rate.

There were hardly any analysts available to comment on the company’s results. PTC is not aliquid stock, thus it doesn’t create interest among majority of analysts covering the Karachibourse.

Earlier, PTC had an impressive first half, posting a 353% increase in profit and 23% increasein revenues. The abnormal gains were a result of the rise in core profitability and otherincome, Khurram Shehzad, Head of Research at Arif Habib Corporation then told TheExpress Tribune.

By contrast, PTC’s core profitability for the quarter ended September 2013 was 9.3%, downfrom 11.6% in the same quarter last year. Other income for the quarter also dropped to Rs13million compared with Rs24 million of the same quarter last year.

On the other hand, core profitability increased from 6% during the first nine months of 2012to 12% for the same period this year. Similarly, other income for the nine-month period of2013 increased to Rs118 million, up from Rs51 million in the corresponding period of 2012.




Corporate results: Lafarge Cement profitdrops 86% as cost risesBy Farhan Zaheer


KARACHI: Lafarge Pakistan Cement, the only multinational cement manufacturer inPakistan, announced disappointing results on Wednesday.

The company posted after-tax profit of just Rs39 million in the third quarter ended September2013, down a massive 86% from Rs269 million in the same period of previous year. Earningsper share dropped to Rs0.03 from Rs0.20 last year.

However, on a nine-month basis, the company performed better compared to the previousyear. It earned Rs903 million in the first nine months of 2013 compared to Rs768 million inthe same period of 2012.

“The third-quarter results of Lafarge Pakistan Cement were unsatisfactory for more than onereasons,” Summit Capital analyst Sarfaraz Abbasi said.

One of the foremost things that one could notice was that the company’s administrative costhad gone much higher than its distribution cost, which reflected bad on the management,Abbasi said, adding this also meant that its sales might remain weak in the near future.

Secondly, financial cost increased in the third quarter compared to previous quarters. “This isnot good for Lafarge Cement, as this has happened at a time when other cement companiesare performing well and getting rid of their previous debts,” he added.

Lafarge Pakistan Cement is part of Lafarge, a French company specialising in themanufacture of construction materials.

The company’s plant has an annual production capacity of 2.5 million tons or 5.5% of thetotal installed capacity of the cement industry in Pakistan. Its plant is located at Kalar Kahar,Chakwal district of Punjab, an area considered rich in limestone reserves.

So far, the year 2013 has seen a continuation of high retention prices that has helped thecement industry improve margins considerably.




Respite: FBR extends deadline for ITreturns, wealth statementsBy Shahbaz Rana


ISLAMABAD:

Despite having a 27,000-strong workforce, the Federal Board of Revenue (FBR) hasfailed to address administrative problems relating to filing of income tax returns andwealth statements and has extended the deadline for one month.

The deadline will now be November 30 for filing income tax returns and wealth statementsfor individuals and companies whose financial year ended on June 30 this year or inDecember last year, according to a circular issued by the FBR on Wednesday.

While there may be some justification for extending the date for individuals who are trying tocomprehend new return forms, there is no justification at all for pushing the deadline forcompanies that closed their financial year in December last year, according to tax experts.

This is the second time that the FBR has extended the deadline. Earlier, it pushed the deadlinefrom September 30 to the end of October after failing to furnish income tax return forms. Ithas not officially given any reason for the extension this time.

Owing to the delay, monthly tax collection will likely remain far behind the target, as theFBR has included the taxes that taxpayers will deposit along with the returns in its collectionestimates. According to statistics for fiscal year 2011-12, income tax filers deposited ameagre Rs14.9 billion with the returns.

The revenue board has already missed its first-quarter target by about Rs15 billion, increasingchances of either revising downward the annual target of Rs2.475 trillion or imposing moretaxes.

After falling short of the target, the FBR has ordered the Large Taxpayer Units and RegionalTax Offices to stop paying refunds and is using taxpayers’ money to bridge the gap betweenactual collection and the target.

Over the years the FBR’s capacity has significantly reduced, giving rise to calls for bringing atax expert from outside of the board to improve its work. Current FBR Chairman Tariq Bajwais a grade-21 officer from the District Management Group. According to sources, there hasbeen resentment in the top FBR hierarchy, as some of its members are senior than thechairman.



This is said to have undermined efforts needed to broaden the tax base and improve revenuecollection. According to some reports, the government is considering appointing Bajwa chiefsecretary of Punjab.

Among the reasons behind extension in the deadline for filing tax returns was the FBR’sinability to resolve jurisdiction issues, which arose after changes were made.

It gave the task of sales tax assessment to the field offices where factories were located, butdid not change the jurisdiction for income tax. This way, it dealt a blow to the purpose ofintegrating inland revenue services.

According to officials, the trade and business bodies had also asked for more time to filereturns or else they would stop the process, as they were facing problems in comprehendingthe changes made in the income tax returns and wealth statements.

The FBR finalised the forms quite late that created problems first for the FBR itself and thenfor the business community. Its inability to swiftly incorporate changes made in the IncomeTax Ordinance of 2001 delayed finalisation of income tax return forms.

The businesses were also wary of furnishing Annexure-D seeking every detail of householdexpenditures and income besides issues in filing the wealth statement, according to a taxlawyer.


Stumbling blocks: Law and order, energycrisis stymie Japanese investmentBy Shahram Haq


LAHORE: Bad law and order condition and energy shortages have been a stumblingblock to foreign investment in Pakistan for many years. Though the new government isapparently making efforts to overcome these hurdles, many companies are eitherleaving or scaling down their activities in Pakistan.

However, a good sign is that still many of them are waiting for things to stabilise to someextent so they could immediately jump-start operations as they believe that Pakistan offers agreat potential and is a key to trade with central Asian countries.

Japan has particular interest in this region as part of efforts to promote business ties withcentral Asian states in fields like automobiles and electronics, but it is worried about securityissues and power and gas crisis. It needs better environment and infrastructure. In fact,expansion plans of some companies have been put on the back burner.



“Japanese companies are interested in investing in Pakistan, but persistent problems are notallowing them to do so,” said Toshikazu Isomura, Counsellor at Japanese Embassy, whiletalking to The Express Tribune.

“We know that central Asian markets offer a huge potential for us, we are waiting for thingsto normalise, especially law and order and energy crisis. We are pinning our hopes on thisgovernment as it is taking every possible measure to tackle these issues but there is still along journey ahead,” he said.

Japan declared Pakistan as a country that was “fit for business” when its delegation ofinvestors under the auspices of Japan External Trade Organization (Jetro) visited Islamabad ayear ago.

They expressed interest in increasing supply of auto accessories, supply chain and technologytransfer, especially to the automobile sector of Pakistan, for gaining access to Central Asia.

They were also eyeing some other segments, particularly retail sector and logistics. However,since they left, no major breakthrough had been made, except for the re-entry of Yamaha.

Fresh investment is coming from Yamaha, which will soon start assembling motorcycles atthe Port Qasim after a gap of almost a decade. Japan needs countries like Pakistan to set upproduction facilities as manufacturing back home has become too costly, regardless of thesegment.

“Things are at halt for Japanese companies, there is no proper land route to Afghanistan andother countries from Pakistan, how can we export automobile accessories,” he asked.“Gwadar is the key, but still there is no facility over there.”

Isomura said Japan was still assisting Pakistan government in various projects, of whichincreasing the turbine capacity of Mangla power station was a significant venture.

In reply to a question about Chinese investment in Pakistan, he said companies investing andoperating in any segment in Pakistan were state-owned corporations. “In our case, we onlyencourage private companies to invest. This is our model and we are committed to this,” headded.




Focus on Pakistan: Panasonic to step upactivities next yearBy Ghazanfar Ali


DUBAI: With an increasing focus on the Middle East and Africa region, Panasonic iseager to step up its activities in Pakistan next year in an effort to capture a market thatit says offers a high potential.

“We have not been very active in Pakistan, but we will enhance our activities next yearthrough our representatives there,” Panasonic Marketing Middle East and Africa ManagingDirector Masao Motoki said.

He was talking to The Express Tribune earlier this week at GITEX 2013, the region’s premierIT exhibition, where the Japan-based company unveiled world’s first 20-inch tablet with 4kresolution and lamp-free professional projectors.

In the exhibition, which began on October 20 and will continue until October 24, a host ofbig names are participating including Samsung, Oracle, Huawei, Acer, Dell, Intel, Toshiba,LG and others.

The launch of Panasonic products comes as it strives to keep its market share in certaincategories in the face of growing demand for Samsung products. Panasonic is focusing moreon high-end devices like projectors and tablets to win consumers.

“Though our revenues have grown 104% so far in 2013-14 – Japanese year runs from Aprilto March – profit is the same as last year,” Motoki said. “We are focusing more on projectorsand tablets.”

The company recorded consolidated net sales of 7.3 trillion yen for the year ended March2013.

According to company executives, the lamp-free projector series are an alternative toconventional lamp systems, which have a short life span, with a combination of LED andlaser diodes.

The new projectors, comprising four models, have a life span of 20,000 hours, which isequivalent to more than two years of continuous use without the need to replace a lamp orchange a filter, they say.

Executives say the company has invested $7 million in producing the state-of-the-artprojectors. Overall, it spends 10% of revenues annually on research and development workon all types of projectors.



Alongside the projectors, Panasonic unveiled the Toughpad 4k, said to be world’s first 20-inch tablet with a 4k resolution display for the ME and Africa markets.

Priced at $5,000 and pre-installed with Windows 8.1 Pro, the tablet can be used for videoconferencing, digital viewing with 4k resolution, collaborative working with touch screencapabilities and have an electronic touch pen for accuracy and sketching.

The company expects to sell 30,000 tablets of all types worldwide in the next one year.


China offers assistance in mining andagricultureBy Our Correspondent


KARACHI: The provincial government of Sichuan has offered the Sindh governmentcooperation in exploiting mineral resources, development of agriculture and watermanagement.

The offer was made to Sindh Chief Minister Syed Qaim Ali Shah in a meeting with GovernorWei Hong in Chengdu on Wednesday, says a press release issued by the Pakistan embassy inBeijing.

In the talks, Shah was leading a delegation, which had been invited to come and attend the14th Western China International Fair.

Hong said China had rich experience in the areas of mining, agriculture and watermanagement and the Sindh government could benefit from it.

Qaim Ali Shah, while highlighting the potential Sindh offers for Chinese investment, saidthere was a vast scope of investment in Thar coal mining, wind and solar-based alternativeenergy generation. He invited Hong to visit the Sindh province and see the investmentavenues there.

The governor informed the Sindh delegation that the exhibition had emerged as the mostimportant event that showcased developments in western China in front of the world. In theexhibition, 72 countries and regions were participating, he said.

Deputy Secretary General of Sichuan Provincial People’s Government, Li Jiaguo, also metthe Sindh chief minister and the delegation. Speaking on the occasion, Shah asked Chineseinvestors to take advantage of the immense investment opportunities that the provinceoffered.



Li said Sichuan province had a strong economic base, besides robust agriculture and watermanagement system. The province also had vast experience in mining with cutting-edgetechnology. He assured Shah of collaboration in all these areas.

Later, the chief minister visited the Hi-tech Industrial Zone in Chengdu, which ranked fifthamong 53 hi-tech zones in China. It aims to position Chengdu as an equally modern businesscentre and high-end industrial town.


IMF team arriving: Pakistan lags farbehind in foreign reserves targetBy Shahbaz Rana / Creative: Talha Ahmed Khan


ISLAMABAD:

As an International Monetary Fund (IMF) mission is arriving in Islamabad next weekto assess the country’s performance against agreed targets before releasing the secondloan tranché of $550 million, Pakistan has missed the target by about $800 million onthe indicator of building foreign currency reserves.

Talking to The Express Tribune on Tuesday, renowned economist and former financeminister Dr Hafiz Pasha said balance of payments position was worsening compared to whathad been projected by the IMF for the first quarter of the current fiscal year.

Against the requirement of increasing gross foreign currency reserves held by the State Bankof Pakistan to $5.64 billion by the end of September, the reserves actually stood at $4.824billion, showing a gap of $816 million, he said.

IMF documents also confirm that the Fund would like to see gross reserves at $5.64 billionby September-end.

Since September, the gross reserves position has worsened and by October 11 the reservescame down to slightly over $4.1 billion, according to the SBP.

“The worrisome aspect is that hemorrhaging is going on despite the country being in the IMFprogramme,” said Pasha.

He predicted that November would be a terrible month as the country was going to return$700 million to the IMF in five tranches and there would be no new release of loan from thelender to Pakistan.



“I suspect the reserves will be at $3.3 billion by the end of November, much less than theone-month import bill,” he added, saying the big question was whether the country wasentering a financial crisis despite an IMF programme, like Greece.

Pasha said net foreign exchange reserves held by the central bank had become negative at $3billion. The IMF requirement is to keep net reserves (excluding forward contract liabilitiesand IMF liabilities) at $2.499 billion, according to the IMF documents.

An IMF review mission is arriving on October 28 for holding first review meetings,according to sources in the Ministry of Finance. The mission will review progress on targets,both quantitative and performance criteria, before sending a request to its executive board torelease the second tranche of $550 million in December, they say.

Overall, Pakistan has met almost all performance criteria, qualifying for the next loantranche, they add. Building the reserves is a quantitative target, having no adverse impact onthe next tranche.

However, the SBP will have to give a plausible explanation to the IMF. If the IMF did notagree with the argument, it has the authority to upgrade the condition to a performancecriterion for the next review meeting.

The adverse implication is that the SBP may have to increase market intervention in anattempt to mop up dollars for building the reserves, which is likely to put the rupee underfurther pressure.

In the first quarter of the current fiscal year, the rupee shed 7% of its value against the USdollar and experts forecast that it would depreciate at least 7% more by June 2014, taking theparity to Rs113 to a dollar.

Pasha suggested that the government should seek upfront release of IMF tranches to avertbalance of payments crisis. Unlike the previous programme when the IMF gave $3.1 billionupfront, this time the lender has divided the $6.7 billion programme into 12 equal tranches.

Pasha differed with the IMF projection that the current account deficit would widen to only0.6% of gross domestic product in the current fiscal year. His assessment was that the deficitwould widen to 1.7% as reducing CNG consumption would increase the oil import bill by$500 million.

He said unlike the balance of payments position, public finances were largely on track andthe government achieved the first-quarter budget deficit target. He, however, was the viewthat the country could miss the full-year target of 5.8% of GDP and the gap could widen to7%.

He claimed that the government had placed Rs158 billion worth of deficit outside the booksthat would have to be taken into account at the end of the year.

Published in The Express Tribune, October 23rd, 2013.



OPEN MARKET FOREX RATESUpdated at: 24/10/2013 7:47 AM (PST)

Currency Buying Selling

Australian Dollar 101.75 102

Bahrain Dinar 282 282.25

Canadian Dollar 102.75 103

China Yuan 17.25 17.4

Danish Krone 19.35 19.6

Euro 144.75 145

Hong Kong Dollar 13.45 13.6

Indian Rupee 1.7 1.8

Japanese Yen 1.087 1.18

Kuwaiti Dinar 374.25 374.5

Malaysian Ringgit 33.3 33.55

NewZealand $ 88.25 88.5

Norwegians Krone 17.65 17.8

Omani Riyal 275 275.25

Qatari Riyal 29 29.25

Saudi Riyal 28.1 28.35

Singapore Dollar 84.75 85

Swedish Korona 16.45 16.7

Swiss Franc 117 117.25

Thai Bhat 3.25 3.4

U.A.E Dirham 28.8 29.05

UK Pound Sterling 171.25 171.5

US Dollar 106.5 106.75



INTER BANK RATESUpdated at: 24/10/2013 7:47 AM (PST)

CurrencyBank Buying

TT CleanBank Selling

TT & OD

Australian Dollar 102.47 102.66

Canadian Dollar 102.95 103.15

Danish Krone 19.58 19.61

Euro 146.05 146.33

Hong Kong Dollar 13.67 13.7

Japanese Yen 1.0878 1.0898

Saudi Riyal 28.26 28.32

Singapore Dollar 85.65 85.81

Swedish Korona 16.63 16.66

Swiss Franc 118.46 118.68

U.A.E Dirham 28.86 28.91

UK Pound Sterling 172.14 172.47

US Dollar 106 106.2



Bullion Rates (Gold Prices) in PakistanRupee (PKR)As on Thu, Oct 24 2013, 04:00 GMT

Metal SymbolPKR

for 10 GmPKR

for 1 TolaPKR

for 1 Ounce

Gold 24K XAU 45,677 53,221 142,075

Palladium XPD 25,550 29,770 79,472

Platinum XPT 49,292 57,433 153,317

Silver XAG 777 905 2,417

Gold Rates in other Major Currencies

Currency Symbol 10 Gm 1 Tola1

Ounce

AustralianDollar

AUD 445 518 1,383

CanadianDollar

CAD 445 519 1,385

Euro EUR 311 363 968

JapaneseYen

JPY 41,783 48,684 129,961

U.A.EDirham

AED 1,577 1,837 4,904

UKPoundSterling

GBP 265 309 824

USDollar

USD 429 500 1,335

* These rates are taken from International Market so there may be some fluctuation fromLocal Market.

Documents

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